Bolinger Strips: How to use this indicator in cryptocurrency trading

Today, BB is one of the most popular indicators for technical analysis. The author of Bollinger Bands is the president and founder of Bollinger Capital Management American analyst John Bolinger.

BB concept developed in 1980. Based on the work and Wilfried Leda and trading lanes Chester Keletner. The book Bolinger on Bollinger Bands, published in 2001, brought the most fame to the indicator, published in 2001.

Bolinger also developed two additional indicators: “%b” and “Bandwidth”. %B shows the value of where the BB is located from SMA, and is used to build models and determine the trends. Bandwidth shows the distance between the upper and lower stripes.

How the lanes of the Bolinger work

The lanes of the Bolinger are built on the “Canal” graph, accompanying the asset price curve and consist of three lines: the middle, upper and lower. The basis for building BB is the middle strip, which is a simple sliding medium (SMA). The other two lines are designated as positive and negative standard deviations.

As standard settings for the BB indicator, which its author recommends, take the period 20 and deviation with value 2. For example, when considering the daily schedule of bitcoin, the settings will look like 20-SMA with a deviation of 2.

It should be noted that the higher the period, the lower the sensitivity of the indicator. In practice, with the exact tuning of the BB, as Bolinger himself noted, 90% of the time of the asset price curve should be between the lower and upper lines of the indicator.

How to use lanes in trading

Bolinger compiled a list of short rules that serve as the basis for understanding BB. The full list of rules can be found on the website Bollinger Capital Management. Here are some of them:

• The cost of stripes at itself is not a signal for the purchase or sale of an asset, and the indicator itself only complements other trading tools.
• Closing the price above the boundaries of the bands more often means continuing the movement of prices in the direction of breaking the level.

Ballinger stripes can be used for many assets, including cryptocurrencies. This indicator is suitable for use at your own periods, including five -minute, hourly, day, weekly and menstruation. The selected period should have sufficient volatility so that the use of BB makes sense.

Advantages and risks of https://gagarin.news/news/goldman-sachs-the-popularity-of-cryptocurrencies-in-the-insurance-market-is-growing/ using lanes of a bellinger

Bollinger Bands allows you to determine the average volatility for a specific asset. The use of BB will help determine the potential maximum or minimum of the price of the asset based on standard data over the past period. The author also indicated that the indicator is suitable for determining price patterns including “double peak” or “double bottom”. Along with this, there are risks. Here is some of them: