This Indicator Provides a lot of Useful Information
- Market volatility value (BBands signal)
- Trend direction (Trend signal)
- Trend continuation or periods of market consolidation (Signal value)
- Periods of upcoming large volatility breakouts (BollingerBands piercing signals - bullets)
- Timeframe (30min,1H, 4H, 8H,12H, 1Day, 1Week) values of candlestick wicks and Bearish/Bullish Engulfing, Gaps, Harami and Doji/Hammer patterns.
Market volatility value (BBands signal)
When the market becomes more volatile, the bands will correspond by widening and moving away from the middle line. When the market slows down and becomes less volatile, the bands will move closer together.
It is very simple to identify dominating price direction by simply read the trend signal: Bullish, Bearish or Range
And just in case you’ve missed the beginning of the trend, Bollinger Bands can help you get in the trend with a good risk to reward ratio on a pullback.
Simply look for dips towards the middle Bollinger Bands line and enter in the direction of the trend.
When Bollinger Bands start to narrow down to the point when they are visually forming a neat tight range (measured by our proprietary formulas and not empirically) the situation signals of an upcoming increase in volatility once market breaks outside the bands. It is similar to a quiet time before the storm.
Price moves outside the bands – trend continuation
When price moves and closes outside the Bollinger upper or lower bands, it implies a continuation of the trend. With it, Bollinger Bands continue to widen as volatility rises.
Bollinger Bands alone are not able to identify continuation and reversal patterns and require support from other indicators. For this, we recommend to use this indicator together with our Dynamic RSI, zero-lag MACD histogram, CCI WWS HeikenAshi and Fast Stochastic (momentum, volume and market strength indicators).
Trend Reversal Patterns with Bollinger Bands
As a rule, a candle closing outside Bollinger Bands followed later by a candle closing inside the Bollinger Bands serves as an early signal of forming trend reversal. It is, however, not a 100% assurance of an immediate trend reversal. (See the blue bullets from the next image)
Since long aggressive trend develops not that often, there will be on general more reversals than continuation cases, still, only filter signals from other indicators may help to spot true and false market tops and bottoms.
Trend direction (Trend signal and angle)
If HMA is greater then SMA and BBands signal in Bullish – uptrend
If HMA is lower then SMA and BBands signal is Bearish - downtrend
Your adjustable parameters are shown below with explanations of the less obvious ones.
~ Source Code Not Included ~
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