š Bollinger Bands: what they are and how to use them in trading?
Bollinger Bands are one of the most popular indicators in technical analysis, created by John Bollinger. They help identify volatility, possible price extremes, and moments of market consolidation or expansion.
š¹ How do they work?
The indicator consists of three lines:
Upper Band: moving average + 2 standard deviations
Middle Band: moving average (usually 20 periods)
Lower Band: moving average ā 2 standard deviations
š What can we interpret?
When the price touches or approaches the upper band, it may indicate overbought conditions.
When the price touches or approaches the lower band, it may indicate oversold conditions.
Very tight bands indicate low volatility and a possible strong movement ahead.
Open bands indicate high volatility.
ā ļø Important:
Bollinger Bands should not be used alone. It is ideal to combine them with other indicators (RSI, volume, market structure) to avoid false signals.
š” Practical tip:
In sideways markets, the bands tend to work better to identify extremes. In strong trends, the price can āwalkā along the bands for quite some time.
š Conclusion:
Bollinger Bands are an excellent tool for understanding price behavior, especially volatility ā but the market context is always essential.
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The token $BANK appears as a central piece of this construction, connecting incentives, governance, and the growth of the protocol. It is worth studying the Lorenzo Protocol carefully and understanding the long-term potential. #LorenzoProtocol šš
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ā ļø Be aware:
Altcoins can offer great opportunities, but they also present higher volatility and risk. Studying the project, the team, and the use case is essential before investing.
š This is the first post in our "ABC of Cryptos" series.
Stay tuned for the next ones to learn, letter by letter, the main concepts of the crypto universe!
š Which altcoin do you like the most? Comment here š