Bollinger Bands
<<4.5.1 Trend technical indicators
(Bollinger Bands, BB)
Bollinger Bands were created by John Bollinger (John Bollinger), financial and technical analyst, president and founder of Bollinger Capital Management, Inc., - An investment company specializing in financial asset management to individuals and corporations.
Bollinger bands show the degree of deviation of the market price from its average value over a specified period. As the average market price of Bollinger used a value of moving average. This indicator consists of three lines. The middle line describes the meaning of the moving average, and the upper and lower lines are the channel width is proportional to the standard deviation of the moving average.
The calculation of the bands is as follows:
ML = SUM (Slose, N) / N-midline
TL = ML + D * SUM ((Close-ML) ^ 2, N) / N-upper line
DL = ML-D * SUM ((ML-Close) ^ 2, N) / N-the bottom line
Where:
Close-close price
N-period analyzed (number of bars)
D-number of standard deviations.
The main idea of the indicator is that 5% of prices should be located outside of the indicator lines, and 95% inside, ie, between the lines BB + (top) and BB-(lower). And when the bull market price during the entire trend, with the exception of corrections, is located between the top line of the Bollinger BB + and a moving average of similar magnitude. In the case of a bearish trend price lies between the lower Bollinger line and moving average.
