Bollinger Bands – work well in ranges but not in trends. When in ranges, buy when
the price goes at or outside of the bottom band. Sell either at the moving average
(higher probable and more conservative) or at the opposing band (more aggressive).
In a range, sell short (which contains more risk) at the top band and buy back to
cover the short at the moving average (conservative) or at the opposing band (more
Bollinger Bands were developed by John Bollinger.
To recap: The best technical indicators are firstly trend lines/support/resistance/volume.
After that would come the versatility of the MACD. It can be left on the chart at
all times. Use only buy signals in the uptrend and sell signals in the downtrend.
Use both signals in a range.
In Trends use 2-3 of the following maximum:
1. Trend lines
2. Moving Averages
3. MACD (buys in uptrend or sells in downtrend)
4. ADX (above 30)
5. PSAR (for stops in strong trends) OR
6. ATR levels for stops
In Ranges, use 2-3 of the following maximum:
2. MACD – both buy and sell signals
3. Bollinger Bands
5. Slow Stochastics
6. ADX below 30
7. ATR levels for stops