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Bollinger bands The Bollinger Bands reflect the direction at the 20- period SMA , and the upper / lower bands reflect volatility. In this way, they can be used to determine whether the price is relatively high or low. According to Bullinger ( Bollinger ) the argument that price range should contain 88 % Zhi 89 % of the price go situation, which makes moving outside of the price range to make sense. Technically speaking, the price is higher when the price is higher than the upper limit, and lower when the price is lower than the upper limit. However, " relative to the higher " are not to be regarded as put or sell signal. Also, we should not be " relative to the lower " seen as bullish or buy signal. There are reasons why prices are high or low. Like other indicators, Bollinger Bands are not intended to be used as a standalone tool. Chart experts should combine Bollinger Bands with basic trend analysis and other indicators for confirmation. Signal: W bottom The W bottom is part of Arthur Merrill's work, which identifies 16 basic W -shaped patterns. Bollinger these different W -shaped state with Bollinger Bands used to identify W bottom, forming the bottom of the downward trend and comprises two reaction lows. In particular, the Bollinger Band looks for a W -shaped bottom that is lower than the first low but stays above the lower band . With Bollinger bands confirmed W end of a four-step step. First, the low-response form. This low is usually (but not always) below the low. Second, the middle zone rebounds. Third, security has a new low price. The low point remains above the lower range. The ability to stay above the lower range in the test shows fewer weaknesses during the last decline. Fourth, the pattern is confirmed by a strong rise from the second low and a breakthrough of resistance. Figure 2 shows Nordstrom ( JWN ) in 2010 Nian 1 month to 2 with a month W- bottom. First, the Unit 1 is formed January anti be low (black arrows), and a lower region below. Secondly, there was a rebound above the middle section. Third, the stock fell below the one-month low and remained above the lower range. Even 5 Yue 2 peak day value below the lower band, the signal will not be affected, because, like, like Bollinger bands, the signal is calculated using the closing price. Fourth, the stock soared in late February with the increase in trading volume , and broke through the high point in early February . Figure 3 shows Sandisk in 2009 Nian 7 months to 8 have a month less W bottom. Signal: M-Tops M-Tops is also part of Arthur Merrill 's work, which identified 16 basic M -shaped patterns. Bollinger Bollinger bands by using these various M pattern recognition M at the top, which is W bottom substantially opposite. According to Bollinger 's statement, the top usually more compelling is more complex than the bottom. Double tops, head and shoulders patterns and diamonds represent the evolving tops. The most basic form of M-Top is similar to double top. However, the response highs are not always equal. The first high can be higher or lower than the second high. Bollinger built proposed unconfirmed looking for signs of when securities hit a new high. A non-confirmation process is divided into three steps. First, securities will have a higher response above the upper limit. Second, there is a callback to the mid-band. Third, the price break through previous highs, but failed to reach to the ceiling. This is a warning sign. The inability of the second reaction high to reach the higher frequency band indicates a weakening of kinetic energy, which can indicate a trend reversal. It is finally confirmed with a support breakout or bearish indicator signal.
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