High probability forex engulfing candle trading strategy
Bollinger Bands Indicator The bollinger bands is made up of three lines: Top band, middle band, and lower band. Any price movement that touches or exceeds the upper or lower band show a market that has increased volatility. This often can set up some great trading opportunities. The bollinger high probability forex engulfing candle trading strategy are a technical indicator similar to the keltner channel as they are both bands and a measure of volatility.
One main difference is the keltner channel uses average true range for the calculation. You can use the bollinger band strategy on any time frame but like most trading signals, a higher time frame trade setup is often more reliable. If price is moving below the 20 period middle line then the market is in a downtrend. If price is moving above the 20 period , consider the market is in an uptrend. Use the angle of the middle line if price exceeds the moving average.
We need to see price moving above the middle line of the bollinger band. You want to see price pullback into the area of the middle line to initiate a buy signal. You will then look for a price action setup that shows price has a probability of travelling back to the upside. You can also use an opposing trend line break for entry. For selling, we want to see price visit the lower part of the band and either touch or pierce the bands.
From there, price pulls back into the area around the 20 period moving average middle line. Like the buy signal, we want to see price action showing intent of moving back lower. Where To Take Profits With Bollinger Bands The bollinger bands actually have a built in indicator for profit taking: the outer bands. One price has touched the middle line for a buy or sell signal, look for price to travel to the upper or lower band to take your trading profits. You can also use a Fibonacci measurement for profit taking and trade management. This is a more advanced bollinger band strategy as I am using a combination of technical analysis to trade this chart.
Fibonacci pull and upside targets after resistance break is 1. DO NOT want to trade against it. This highlights that while technical indicators such as the bollinger band can aid you in trading, price action will always rule. This Bollinger Band Strategy Is Worth A Test Bollinger bands can frame price and show you when there is an extreme move worth noting.
You can use these as a mean reversion system or a continuation swing trading strategy. The mean reversion aspect is a more advanced bollinger strategy and is shown in the second trade example in the last chart. Bollinger bands can keep you objective in your trading by offering you not only a place to consider a trade, but areas to consider taking profits as described above. Whatever way you choose to use the bollinger bands as part of a swing trading strategy, ensure you test it and log a trade plan so you can stay on track. Bollinger Bands And Price Compression Another use of the bollinger bands is to measure price compression and a break from the consolidation.
This is used in conjunction with the keltner channel and is called the squeeze. The Bollinger Band Squeeze can also be a trading system but like every trading method, test your idea before putting money on the line. Please don’t forget to tweet and share this post by clicking those buttons below if you’ve enjoyed this. You can leave a response, or trackback from your own site.