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Bollinger Bands Cheat Sheet

The Bollinger Bands Cheat Sheet outlines various market conditions indicated by the behavior of Bollinger Bands, such as trends, volatility, and potential price movements. It provides actionable reactions for traders, such as buying, selling, or adjusting stop-loss orders based on the price's interaction with the bands. Key concepts include upward and downward trends, squeezes indicating potential breakouts, and price rebounds suggesting trading opportunities.

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sudherson
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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140 views2 pages

Bollinger Bands Cheat Sheet

The Bollinger Bands Cheat Sheet outlines various market conditions indicated by the behavior of Bollinger Bands, such as trends, volatility, and potential price movements. It provides actionable reactions for traders, such as buying, selling, or adjusting stop-loss orders based on the price's interaction with the bands. Key concepts include upward and downward trends, squeezes indicating potential breakouts, and price rebounds suggesting trading opportunities.

Uploaded by

sudherson
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Bollinger Bands Cheat Sheet

Bollinger Band Action What This Indicates Potential Reaction

Upward middle band Indicates an uptrend Buy or hold long


positions

Downward middle Suggests a downtrend Sell or hold short


band positions

Narrow bands Less volatility; potential for Prepare for a breakout;


(squeeze) significant price move consider entry points

Price touching or Potentially overbought Consider selling,


moving outside the (poised to fall in price) shorting, or tightening
upper band stop-loss orders

Price touching or falling Potentially oversold (poised Buying or tightening


outside the lower band to go up) stop-loss orders

Price bounces off the The upper band becomes a Consider taking profits
lower band potential exit point if the trend or setting up a trailing
reverses stop-loss

Price touches the The lower band becomes a Consider taking profits
upper band potential target if the reversal or setting a trailing stop-
occurs loss

Price rebounds from Potential buying or selling Enter long or short


upper or lower bands opportunity, especially in positions; set stop-loss
toward the middle band ranging markets ("Bollinger orders
Bounce")

Price move starting at Signals a potential breakout Enter long positions; set
the upper band and stop-loss orders below
continuing outside it, recent lows
with increased volume

Decisive move below Could mean a breakdown or Enter short positions; set
the lower band, with the start of a new bearish stop-loss orders above
high volume trend recent highs

Widening bands after a Could indicate an imminent Prepare for entry, watch
squeeze breakout for confirmation signals
Bollinger Bands Cheat Sheet

Bollinger Band Action What This Indicates Potential Reaction

Widening bands Signals increase in volatility Adjust risk management;


and the potential beginning consider trend-following
of a strong price trend strategies

Tightening bands Suggests a period of lower Prepare for a breakout;


(squeeze) volatility and consolidation; consider entry points;
often a precursor to a major tighten stop-loss orders
price move or breakout

Longer squeeze Could indicate a more potent Prepare for a larger


breakout coming price move; increase
position size

Tightening bands Could mean there's no Adjust risk management;


consensus in the market wait for clearer signals
about the future price before entering positions
direction

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