- How to Read Bollinger Bands Signals
The main components of the indicator are a simple moving average (middle line) with one line above and one line below which are plotted a certain distance from the moving average.
The middle line, moving behind the chart, shows the direction of the trend.
The upper and lower lines create a price range. If the chart goes beyond its boundaries, this is a signal to open a trade.
If the chart and the lower line of the indicator intersect, then the trend may reverse in the very near future.
If the chart’s candlestick crossed the lower boundary of the price range, it is probably signaling an uptrend.
When the chart crosses the upper Bollinger Band, it is probably signaling a downtrend.