Weekly Lesson Wednesday📝 

Intro to Technical Anal-ass-is

^_Lesson
Bollinger Bands

Ladies and Gentleman,

Honestly, I am gonna say it. TA is kind of gay. I would rather look at the fundamentals of a company rather than scribble on a chart a bunch of hokey lines, but there are a few technical indicators that kind of make sense.

Well, one of them is Bollinger Bands.

Back in the 80’s a man named John Bollinger decided to go full nerd mode and create a technical indicator that can help us identify trends, breakouts, sell-offs, and anything to do with price action.

So what are Bollinger Bands and how can we use them?

Bollinger Bands are really quite simple to read.

Bollinger bands are based on a 20-day moving average (the middle line), so the closing price of the asset for the last 20 days, divided by 20, essentially the 20-day moving average gives a clear vision of the underlying trend without fluctuations.

Now the lines above and below are just 2 standard deviations away from the mean (the SMA- simple moving average).

I don’t know what John Bollinger was smoking when he came up with this shit, but pass that jawn my way.

All you need to know about Bollinger Bands is how to read them, they were created for an easy-to-digest visual, fortunately enough every charting platform out there can plot this for us.

So how can we use John’s Little Lines to make money?

Here are the principles of Bollinger bands:

Outside lines getting further apart = increased volatility.

Outside lines getting closer = decreased volatility

Price constantly tapping the top line and trending in the top half of the bands (top channel) = uptrend

Price constantly tapping the bottom line in the bottom half of the lines (bottom channel) = downtrend

Price touching or exceeding top-line = overbought, potential pullback

Price hitting the bottom line or crossing below = oversold, potential bounce

Basically, we can use these lines as bumpers for the price.

Hit the top and come back down, Hit the bottom and come back up.

However, in some instances when it is consistently bouncing off the bottom it indicates a strong downtrend, and vice versa when it bounces off the top.

Look, just cause you know about these lines now, it doesn’t mean you are a stock guru and can predict price action, you should use Bollinger bands with several other technical indicators alongside it to confirm.

for example, MACD, Volume, and RSI are some compatible indicators that can help reassure your whacked-out theories.

But the truth is, if you learn to read these lines and listen to my next 3 weekly lessons on MACD, Volume, and RSI, you can actually use these lines to greatly improve your trading game.

All in all, I am still a fundamental guy, and just use these indicators to help snipe entries & exits on positions I have a fundamental thesis’ on. 

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