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19.06.2019


AAKASHAYA PATRA SEVEN STAR SMART EDUCATION SERIES PART – 9 :
Bollinger Bands

Bollinger Bands is volatility indicator invent by "John Bollinger" in 1980.There is a three parallel bands running with the price (Candlestick) which help us to Identity Stock Trend, Stock Volatility and Stock Over Bought and Over Sold Position Middle Band of the Bollinger Band calculated on the basis of 20 Period Simple Moving Average (SMA), and Calculation of the Upper Band and Lower Band based on +/-2 Slandered Deviation

The detail calculation of the Bollinger Band as below :

BOLU=MA(TP,n)+m*s[TP,n]
BOLD=MA(TP,n)-m*s[TP,n]
where:
BOLU=Upper Bollinger Band
BOLD=Lower Bollinger Band
MA=Moving average
TP (typical price) = (High+Low+Close)÷3
n=Number of days in smoothing period (typically 20)
m=Number of standard deviations (typically 2)
s[TP,n]=Standard Deviation over last n periods of TP

Here we have to understand how to use Bollinger Band on Candlestick Chat which help us to refine our trading decision to identify stock trend, support and resistance, volatility,stock over bought and over sold position

Use of Bollinger Band to Identify the Trend :-

As we know, in the calculation of the Bollinger Band, we use 20 period Simle Moving Average ( 20 SMA) When ever stock start to trade Upper side of the Middle Line of the Bollinger Band, we can consider it as a buying opportunity and its assume that stock now may show Upper side movement (Up Trend) from its current position. Similarly,When stock start to trade below side of the middle band of the Bollinger Band, its a sign of the down fall / Down trend from its current position.

Use of Bollinger Band to Identify Support and Resistance : -

As we already discussed in detail in earlier Smart Investment issue about Support and Resistance When ever stock price comes to touch Bollinger Band, Band will be act as a Support or Resistance subject to Stock Price comes from Upper Side or Below Side It means if stock price comes from lower band side to touch middle band, middle band act as a resistance line for stock price similarly if stock price comes from Upper Side to touch middle band,middle band will be act as support line for that stock price

Bollinger Band Squeeze and Expansion :-

Bollinger Band are compress and expand as per the volatility, if Bands are Squeeze it means its a very low volatility market and breakout or expansion is expected in near future When ever we received break out in Bollinger Band, direction of the break out will play an important role in future price movement, if we received Up ward side breakout it means it expected price will be go in Upward direction and if we received breakout down side it means price will be go in down ward direction, accordingly band are expand and its show the volatility and price movement in the stock.

We @ Aakashya patra use this indicator with many other ways also and found to be 99% result on the same if u want to learn this with live chart u get clear-cut picture and for that u want to join our classes where we give u live update.

for more such type of education joint our online series and batches and be a pro trader contact on 7028 421 786.

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