Bollinger Bands

Bollinger Bands

Bollinger Bands are based on MA + Standard Deviation……Few peoples use the bands as support & resistance levels…. And this theory work correctly in range-bound market as buy near lower band & sell at mid or near upper band or sell near upper or mid band and buy near lower band……….

But …….I feel this is not the correct interoperation of the tool……… it is much better to check the continuation of price rather than looking at weather it is near upper-mid or lower band…….

The continuation of price at upper band indicate a bullish trend and buying is much at dips is a much better option rather than shorting or selling……and visa versa …….continuation at lower band indicate sell…….

We can check the continuation of price at upper band in DLF & Bharti & at lower band in Ranbaxy.

Here ……..this is to be noted…….when price is appearing near upper band…….mid-band can be used buying point or support whereas if the continuation of price is at lower band mid band can be used as selling point or resistance level.-