𝗕̲𝗼̲𝗹̲𝗹̲𝗶̲𝗻̲𝗴̲𝗲̲𝗿̲ ̲𝗕̲𝗮̲𝗻̲𝗱̲𝘀̲ ̲-̲ ̲𝗪̲𝗵̲𝗮̲𝘁̲ ̲𝘁̲𝗵̲𝗲̲𝘆̲ ̲𝗮̲𝗿̲𝗲̲ ̲+̲ ̲𝗧̲𝗿̲𝗮̲𝗱̲𝗶̲𝗻̲𝗴̲ ̲𝗦̲𝘁̲𝗿̲𝗮̲𝘁̲𝗲̲𝗴̲𝘆̲!̲

By Barakz12 | CryptocurrencyINV | 26 Mar 2020

Hi guys, today we will discuss a well-known indicator which is called "Bollinger Bands".


In technical analysis, the most basic thing in the charts. However, you can add things to the chart that are called indicators. Indicators are different tools that do different measurements of the chart and based on it, they show you a specific value of something.

One of the most famous indicators is called "RSI" (Relative Strength Index) which actually shows you whether a stock/crypto coin is overbought or oversold. 




So, what the hell are Bollinger Bands?


Bollinger Band (BB) is one of the most famous indicators which most technical analysts use. Bollinger Bands are made from two bands:

One upper band, and one lower band. There is also a line in the middle of the bands which goes along with the chart. That line is the average price of the coin. It can be the average price of the last 12 candles/50 candles or any number you choose.


The Bollinger Bands actually give you a "path" between both bands. What cool about it is that the chart itself exist within the path of the bands for around 80% of the time!



Image is taken from Wikipedia

So, how can you trade using Bollinger Bands?


When trading using BB, there are several strategies to do so. One of them is to buy the stock/crypto you want once the price crosses the lower band (or if you want to go short then do it once it touches the upper band). We expect that once the price reaches one of the bands then the price is currently low/high compared to the average one. 

So you can buy it and sell it once it touches the opposite band. For example, I buy ETH once its price in the daily chart touches the lower band of the BB and then I wait to sell it only once the price touches the upper band. 

However, using this method alone for trading is not enough! You can find yourself actually losing if you rely only on BB because sometimes when the price in the chart touches one of the bands then it doesn't go up, it keeps going in the same direction.



Image is taken from Wikipedia



To conclude,


BB are a great way to measure the valuation of a stock/cryptocurrency because it gives you a feeling of how oversold or overbought the thing you want to trade is. However, most technical analysts combine a few different indicators in order to analyze the chart in the best way. Relying on one indicator will never give you enough information and you can miss something you don't notice and then you lose. 











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