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| Use Bollinger Bands to identify sub phases within the current trend. When price rises above the center average, it's supported and in a bull phase. From here, price tends to move all the way to the top band. The center band (BB moving average) becomes resistance when price breaks below it. When broken, odds favor that price will fall all the way to the bottom band. A strong trend in either direction will exhibit price bars clinging to the top or bottom bands like curtain rungs. Finally, when price shoots outside either band, it's overbought or oversold and should pull back immediately within its limits. The classic Bollinger Band setting is a 20 day (bar) and 2 standard deviation calculation. For intraday trading, overlay 5 and 8-bar, 5-minute moving averages within a 13-bar, 2 std-dev BB. This will consistently pick up major intraday market swings. |
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