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Pastimes : ASK Vendit Off Topic Questions

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To: sandintoes who wrote (11777)4/25/2000 2:41:00 PM
From: thecow  Read Replies (2) of 19374
 
Rudi

Since the Vman is apparently not around today, Here's some info on BBands. This should clarify.

Bollinger Bands are usually displayed on top of security prices, but they can be displayed on an indicator. These comments refer to bands displayed on prices.

As with moving average envelopes, the basic interpretation of Bollinger Bands is that prices tend to stay within the upper- and lower-band. The distinctive characteristic of Bollinger Bands is that the spacing between the bands varies based on the volatility of the prices. During periods of extreme price changes (i.e., high volatility), the bands widen to become more forgiving. During periods of stagnant pricing (i.e., low volatility), the bands narrow to contain prices.

Mr. Bollinger notes the following characteristics of Bollinger Bands.

Sharp price changes tend to occur after the bands tighten, as volatility lessens.

Edit in: Up or Down

When prices move outside the bands, a continuation of the current trend is implied.

Bottoms and tops made outside the bands followed by bottoms and tops made inside the bands call for reversals in the trend.

A move that originates at one band tends to go all the way to the other band. This observation is useful when projecting price targets.

equis.com

Hope this helps,

tc
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