Bollinger Bands Explained: How to Spot Overbought and Oversold Conditions

CANVA

There are many indicators which are not proved to be the effective and accurate but there are some which really works for trading. You can take almost 50% help from these indicators.

The most famous and also the working indicators are RSI, MACD, Bollinger Band, EMA. These are the indicators which looks very simple but are the most used ones.

Among these indicators, today I will discuss on BB (Bollinger Band). This is one of my favorite indicator which helps you to know about the overbought, oversold positions, which helps you to know about risk and market volatility.

Its very simple, you have just to add this indicator on the chart. After that you will see the three lines or three bands.

The upper band, middle band and lower band.

The upper band indicates that market is at overbought position and whenever you see that coin reaches that level then you can sell your holdings or also open short positions.

Same is the case with lower band, when the price reaches this level then its oversold position and there is more chance for the price recovery. At this level you can buy or open long positions.

There are some times when these bands get wide, which means that market is volatile. In such conditions, its advised to not open any trade and wait until the bands get narrow.

Also when the price is at the middle band then its unpredicted and you can go to take help from other indicators for the continuous of your trade.

THANK YOU!