Developed by trading veteran John Bollinger in 1983, the tool has stood the test of time with Bollinger himself frequently analysing and commenting on the cryptocurrency market.
Overview-Bollinger Bands are based on volatility, which is cyclical and predictable. Low volatility environments eventually lead to periods of high volatility, and vice versa.
-The Bollinger Bands are composed of a simple moving average (20-period by default) and an upper and lower band that are set to 2 standard deviation by default.
-‘W bottoms’ should be used to setup a long position and you should enter once there is a display of strength in the asset.
-‘M tops’ should be used to set up a short position but requires more confirmation than a bottom. Enter the short once there is a display of weakness.
-The ‘Bollinger Squeeze’ can be identified with Bollinger Bands and the BandWidth indicator. ‘The Squeeze’ allows us to identify and trade the breakout at the beginning of a trend.
-The ‘Bollinger Bounce’ is a reversal strategy. We look for a buy position once the price action touches the lower band, and an oscillator is positive. We look for a sell positions once the price actions touches the upper band, and an oscillator is negative.
What are the Bollinger Bands?Bollinger Bands are curves drawn in and around the price structure consisting of a moving average (a middle band), an upper band and a lower band that enable you to identify whether the price of an asset is relatively high or low.
Read more here:
https://medium.com/interdax/an-introduction-to-trading-bitcoin-with-bollinger-bands-9e484db9353b?source=friends_link&sk=6683033bb5cefd450aa209f087831de6
