Application of Bollinger Bands on Forex

One key difference in currency trading and equities is that there is no volume to get a hint as to when a pulse has a sufficient stock of the strength - there is only price. For example, when trading in shares if the price consolidated immediately below a key resistance level at below-average volume, and then breaks at substantially increasing the amount it gives the trader more confidence in a breakthrough, because it shows that the major market players have shown their involvement in the form of volume. "The volume precedes price" as they say.

At the forex market, however, no such additional tips. There is only the price and nothing more. In this sense, Forex is very conducive to technical analysis, especially the concentration only on price activity. In this regard, when trading on the Forex it is important to wait for that price, reiterated its previous motion of the omni-range.

How can it be done? One of the simplest ways in which we can rely on is the use of the band Bollindzhera. The bands Bollindzhera can help determine when the price is ready to develop the trend, rather than consolidated, and in essence, by helping to answer the question: When it is ready to move?

All markets and alternates being omni-directional movement, and differentiation of these two phases is the determining when trading in the FOREX market. Who is not in the trend rate of the tool can be a trader losses, while the trend is developing a tool can offer great opportunities for profit. The ability to distinguish between these two stages are not using the volume to confirm, can significantly influence the outcome of trade. Let's look at the 60-minute schedule for the British pound:

You can see a very clear leap up and consolidation. Model of recovery of the GBP from 16 December to 18 December is a very good opportunity for trade. Look at bands Bollindzhera and pay attention as the line begins to widen the bands, as the price moves from the area of consolidation, then, the price of the top band "goes" above.

After such a "trip", the price starts to move away from the upper band, as she enters the stage of non-movement. The bands then begin to converge rapidly, reducing the distance, as price consolidates. Then, the model is repeated again. Knowing when the price trend is in motion, instead of omni, a trader can identify more precise points of entry and exit from the market, exactly how and to determine the time when the sound outside the market.

Below is a sample daily schedule NZD / USD. Notice how, in late December, "Kiwi" trading in a narrow sideways range, with strips Bollindzhera, reflecting the strong compression of the price range. This situation was preceded by explosive movement up as soon as NZD broke above the range that was observed rapidly expanding stripes. Identify short ranges, which occur before the starting direction of motion, may also help to provide further evidence that the "pendulum" has shifted back toward a strong trend, after being in a very narrow range:

Thus, bands Bollindzhera help navigate among these successive stages of consolidation and breakthroughs in the foreign exchange market, especially for traders accustomed to rely on short-term indicators of volume.

Examine the behavior ????? Bollindzhera when they are narrow and expanded to the extent of currency tools and use them to determine when the currency pair begins to resume its trend, and when she can go back to the consolidation. This will help you determine the inputs and outputs of fluctuations more accurately, just as the amount used in the stock market to more accurately determine when a sufficient force of buyers or sellers to move the share price up or down.

Forex Magazine
based on www.screamingquote.com