BollingerBands

[columbus]

I too think that the gap will be a tough resistance this time. Even if the political situation is stable, the economy and international cues don't support any major upmove.

I don't understand much about sigmas but with my basic understanding of the patterns, as I mentioned elsewhere, nifty may be making an M, with the gap as the top. I hope it has finished forming the left shoulder and that we are on the way up to form the right shoulder. The difference in the heights of the two shoulders may indicate the further targets for me.

I know, I know.. watching the "M" and "W" is a very simplistic way of TA..

Hi Timepass,

Sigma is nothing but the 2nd part of BB.
BB(20,1).......Sigma1
BB(20,2).......Sigma2
BB(20,3).......Sigma3

Wick hitting BB(20,3) is quite common.But Body hitting the band seldom
happens.BB(20,3)hit TOP band month back,we knew the reaction of severe
correction.Similarly it hit bottom band of BB(20,3) around 10 days back.
So a bounce can be expected ,as per my interpretation.

 

[timepass]

So, Columbus, what if we kept the volatility the same and changed the average period of Bollinger Bands?? What are the theories on that and the logic behind using 20 as the average period? Elsewhere 4xpip had mentioned that he prefers (28,3) as setting for his Bollinger bands.



Aside : I too sincerely hope that nifty is making another M with a right shoulder beginning about now. Else, it could be making a much more anemic and lower right shoulder to a prior M with left shoulder from July 12-Aug. 9, and the later dates as a much lower right shoulder, indicating a sort of free fall

 

[prst]

Dear friends,

I have a basic query regarding BBs.
Whenever they hit the lower band (in 20 day timeframe), is it a signal that we should not enter a short trade?

stocks like suzlon, rcom, educomp and unitech were continuously in a downtrend and touching the lower bands. This prompted me to stay away from a short trade in them ( since last week), but they continued to go lower and lower.

Any inputs in this topic would be appreciated..

thanks
prashanth

 

[columbus]

So, Columbus, what if we kept the volatility the same and changed the average period of Bollinger Bands?? What are the theories on that and the logic behind using 20 as the average period? Elsewhere 4xpip had mentioned that he prefers (28,3) as setting for his Bollinger bands.



Aside : I too sincerely hope that nifty is making another M with a right shoulder beginning about now. Else, it could be making a much more anemic and lower right shoulder to a prior M with left shoulder from July 12-Aug. 9, and the later dates as a much lower right shoulder, indicating a sort of free fall

Hi timepass,

Different instruments like Equity trading , Derivative trading,commodity
trading ,forex trading etc... attract different settings.Perhaps (20,2)
is universal setting ,in my opinion.They is nothing wrong in using setting
like BB(22,2).It will be very useful in strong trending day.But fails miserably on
choppy day.

 

[columbus]

Dear friends,

I have a basic query regarding BBs.
Whenever they hit the lower band (in 20 day timeframe), is it a signal that we should not enter a short trade?

stocks like suzlon, rcom, educomp and unitech were continuously in a downtrend and touching the lower bands. This prompted me to stay away from a short trade in them ( since last week), but they continued to go lower and lower.

Any inputs in this topic would be appreciated..

thanks
prashanth

Hi prashanth,

Whenever they hit the lower band (in 20 day timeframe), is it a
signal that we should not enter a short trade?

"If candles are sandwiched between BB(20,2) and BB(20,1) continue
with the trend."

That is a general notion people have.
I have a modified version of Bollinger Bands ,known as in the thread
BollingerWorm.Please read the latest file in it.

More info here.
http://www.traderji.com/day-trading/48558-bollingerworm.html#post578831

 

[columbus]

EOD=18.8.11 ................7-month NIFTY chart

Basically there are 2 lines in chart , 20-SMA in (WHITE+BLACK) colours
and 10-ema in VIOLET colour.In bullish conditions 20SMA will in White
colour and bearish condition it will be in Black colour.Violet colour line
decides the momentum of market, mostly.

 

[columbus]

Hi prashanth,


Self-explanatory in nature.

EDUCOMP

 

[4xpipcounter]

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Prashanth, I wanted to post these charts just to add something to what has already been discussed, and to add an additional perspective to why it is not necessarily time to go short just because the candle hits the bottom of the bands.

The daily shows a bounce off the bottom band, getting close to the mean, then reversing, which is normal behavior.

The 4-hour shows the hit at the bottom with it being level, so you would think it is time to reverse.

The hourly hit the band while it was pointing north 10 hours ago, and it has been hugging or close to the band ever since.

The point is if you see a strong trend on one TF, then back it up one TF (As example going from the 4-hour to the hourly.), and you will see price action from that TF on the band for several candles.

 

[prst]

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[IMG=http://img692.imageshack.us/img692/8701/94760671.gif][/IMG]

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[IMG=http://img689.imageshack.us/img689/4558/zzzj.gif][/IMG]

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Prashanth, I wanted to post these charts just to add something to what has already been discussed, and to add an additional perspective to why it is not necessarily time to go short just because the candle hits the bottom of the bands.

The daily shows a bounce off the bottom band, getting close to the mean, then reversing, which is normal behavior.

The 4-hour shows the hit at the bottom with it being level, so you would think it is time to reverse.

The hourly hit the band while it was pointing north 10 hours ago, and it has been hugging or close to the band ever since.

The point is if you see a strong trend on one TF, then back it up one TF (As example going from the 4-hour to the hourly.), and you will see price action from that TF on the band for several candles.

Thanks buddy..
basically the rule is , piercing the band is a warning signal about a reversal ..
grazing the bands means the trend is intact..
hope i got it right this time..

 

[columbus]

EOD=19.8.11 ................7-month NIFTY chart

Basically there are 2 lines in chart , 20-SMA in (WHITE+BLACK) colours
and 10-ema in VIOLET colour.In bullish conditions 20SMA will in White
colour and bearish condition it will be in Black colour.Violet colour line
decides the momentum of market, mostly.