Bollinger Bands
Overview
Bollinger bands rely on standard deviations in order to adjust to
changing market conditions. When a stock becomes volatile the bands widen
(move further away from the average). Conversely, when the market becomes less
volatile the bands contract (move closer to the average). Tightening of the
bands is often used as an early indication that the stock's volatility
is about to increase.
Interpretation
Bollinger Bands (as with most
bands) can be imposed over an actual price or another indicator. When prices
rise above the upper band or fall below the lower band, a change in
direction may occur when the price penetrates the band after a
small reversal from the opposite direction.
Moving Average Envelope
Overview
Bollinger bands rely on standard deviations in order to adjust to
changing market conditions. When a stock becomes volatile the bands widen
(move further away from the average). Conversely, when the market becomes less
volatile the bands contract (move closer to the average). Tightening of the
bands is often used as an early indication that the stock's volatility
is about to increase.
Interpretation
Bollinger Bands (as with most
bands) can be imposed over an actual price or another indicator. When prices
rise above the upper band or fall below the lower band, a change in
direction may occur when the price penetrates the band after a
small reversal from the opposite direction.
Prime Number Bands
Overview
This novel indicator identifies the nearest prime number for the
high and low and plots the two series as bands.