Bollinger bands on Nifty shows the picture of fall till date.These bands are ideal for the positional traders who like to know their risk level and the expected range.It normally consists of 20 day simple moving average at the centre and has 2 bands showing standard deviations of price , one above the average and other below the average.The bands can be used both for timing and targets with any oscillator you are comfortable with.Once you put bands on the chart your trading canvas is ready and most the picture formed by the price will be within the bands.Prices move from band to band halting at average line sometimes.The strength of the move can be judged by the bands when they start expanding.Normally the price pushes the band higher in the direction of trend.Whenever you catch such a move ride it till it drops to inside of the band or breaks the average line.Before such a move the bands normally contract and then expand with the move.Watch moves marked A-B on chart. Next observation is market after giving such big moves tends to go sideways for a while and has given a sizable reaction on the upside This positions have been marked by rectangles on the chart.So we need to be cautious for the up move if it materializes like last three times.The market may go sideways keeping us guessing all the time.
Happy Trading!
@Sir,
ReplyDeleteGood Morning! Thanx again! will ask few Qs
What parameter hv u chosen for the stddiv. and will one adjust for diff. TF. If yes, what sud be the basis?
Looking at the chart, 4780 can be the nearest tgt it is approaching. Am I right Sir?
Regards
Sandeep
Hi San,
ReplyDeleteNo tinkering with the default as the designer has set them after his research so i have taken them at face value.Its by default at 2 std deviations!
As for the move i am keeping all the options open.Never get biased on markets.Always keep an open mind and trade levels as they come.Also think of all possible moves before taking the positions.Also have three levels with you before executing the trade buy,sell and stop loss.Not afterwards.Trend looks down!Watch for close below 4888 for your target.
Regards
K B raut