Trade Gold Trading

Bollinger Bands Price Action in Ranging Trading Markets

Bollinger Bands Indicator is also used to identify periods when a market trend is overextended. The guidelines below are considered when applying this indicator to a sideways crude trend.

Bollinger Bands Indicator is very important because it is used to give signals that a price breakout might be upcoming.

During a trending market these techniques don't hold, this only holds as long as Bollinger Bands are pointing sideways.

  • If the crude market price touches the upper band it can be considered overextended on the upside - overbought.
  • If the crude market price touches the lower band the price can be considered overextended on the bottom side - oversold.

One of the uses of Bollinger Band indicator is to use the above overbought and oversold guidelines to establish buy & sell targets during a ranging market.

  • If crude price has bounced off the lower band crossed the center-line moving average then the upper band can be used a sell level.
  • If crude price bounces down off the upper band crosses below center moving average the lower band can be used as a buy level.

How to Trade Bollinger Bands Indicator in Range Market

Trading Bollinger Bands in Ranging Markets - Bollinger Bands Strategy Method

In the above ranging market the instances when the crude trading price hits the upper or lower bands can be used as profit targets for long/short trade transactions.

trades can be opened when the market hits the upper resistance level or lower support level. A stop loss order should be placed a few pips above or below depending on the trade opened, just in case the price action breaks-out of the range within these Bollinger bands.