Bollinger Bands, created by John Bollinger in the eighties, measure price volatility through the deviation of two bands from a moving average. The bands narrow when price changes are minimal and widen during high volatility. Traders use the upper and lower bands for various strategies.
The lower band signals a buying opportunity when the price breaks below it, indicating a potential upward trend. Conversely, the upper band indicates a sell or short opportunity when the price breaks above it, suggesting a potential downward trend.
This strategy does not yield good results as, during corrections and bullish impulses, this indicator does not provide enough information to determine whether to buy on dips or sell on rallies.
You may end up buying too early and getting stuck with high prices, and if you are leveraged, you could lose capital.
The lower band signals a buying opportunity when the price breaks below it, indicating a potential upward trend. Conversely, the upper band indicates a sell or short opportunity when the price breaks above it, suggesting a potential downward trend.
Conclusion and Analysis
This strategy does not yield good results as, during corrections and bullish impulses, this indicator does not provide enough information to determine whether to buy on dips or sell on rallies.
You may end up buying too early and getting stuck with high prices, and if you are leveraged, you could lose capital.