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Bollinger Band® Breakouts

Another indication of breakout direction is the way the bands move on expansion. A trader might use other confirming indicators as well, such as a support line being broken; this is shown in the example above of Wal-Mart stock breaking below support. Why is this important? The single biggest mistake that many Bollinger Band novices make is that they sell the stock when the price touches the upper band or buy when it reaches the lower band. So, instead of trying to win big, you just play the range and collect all your pennies on each price swing of the stock. If there is a positive divergence — that is, if indicators are heading upward while price is heading down or neutral — it is a bullish sign.

The breakout in the Bollinger Bands Moving Average is a confirmation signal, which usually comes after a price interaction with the bands. If the price bounces from the upper band and then breaks the period SMA in bearish direction, we get a strong short signal.

Bollinger Band Breakout through Support Potential Sell Signal

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Determining Breakout Direction

The most comprehensive guide for how to trade with bollinger bands. Learn cutting edge bollinger bands strategies for bitcoin, futures and guide has videos, real-life trading examples and custom visuals to demystify and answer all of your questions related to the indicator. Notice how bands volume exploded on the breakout and the price began to trend outside of the pdf these can be hugely profitable bollinger if you give them room to fly. I want to touch on the middle band . False Breakout In looking for an entry opportunity, always watch for signs of a false breakout – I will guide you within the scope of each lesson regarding false breakouts but you will find, in each case, that experience will be your best teacher. As the bands begin to widen, we are looking for a close above the upper band or below the lower band.