$FIL 4About 2 days after the Bollinger Bands contracted, price broke below the lower band (0.9781).
During the contraction phase, the direction is uncertain, so first understand what the Bollinger Bands indicate.
The middle band is simply the 20-period moving average. Many people also use it as a reference for short-term strength: prices above the middle band are considered strong, while prices below it are considered weak.
Many people also look at trading volume: after the bands contract, a breakout accompanied by increased volume is often more informative than one on declining volume.
Understanding an indicator should help you feel less intimidated by the numbers, not help you pinpoint exact tops and bottoms.
During the contraction phase, the direction is uncertain, so first understand what the Bollinger Bands indicate.
The middle band is simply the 20-period moving average. Many people also use it as a reference for short-term strength: prices above the middle band are considered strong, while prices below it are considered weak.
Many people also look at trading volume: after the bands contract, a breakout accompanied by increased volume is often more informative than one on declining volume.
Understanding an indicator should help you feel less intimidated by the numbers, not help you pinpoint exact tops and bottoms.