Bollinger Bands Stock Indices Price Action in Ranging Stock Indices Markets

Bollinger Bands Indicator is also used to identify periods when a Stock Indices market trend is overextended. The guidelines below are considered when applying this Stock Indices trading indicator to a sideways Stock Indices trend.

Bollinger Bands Indicator is very important because it is used to give Stock Indices trading signals that a Stock Indices price breakout may be upcoming.

During a Stock Indices trending market these techniques do not hold, this only holds as long as Bollinger Bands are pointing sideways.

• If the Stock Indices market price touches the upper band it can be considered overextended on the upside - overbought.
• If the Stock Indices market price touches the lower band the currency can be considered overextended on the bottom side - oversold.

One of the uses of Stock Indices Bollinger Bands indicator is to use the above overbought and oversold Stock Indices trading guidelines to establish buy and sell targets during a ranging Stock Indices market.

• If Stock Indices price has bounced off the lower band crossed the center-line moving average then the upper band can be used a sell level.
• If Stock Indices price bounces down off the upper band crosses below the center moving average the lower band can be used as a buy level.

Trading Bollinger Bands in Ranging Stock Indices Markets - Bollinger Bands Stock Indices Trading Strategy

In the above ranging Stock Indices market the instances when the Stock Indices price hits the upper or lower bands can be used as profit targets for long or short Stock Indices trade positions.

Stock Indices trades can be opened when the Stock Indices market hits the upper resistance level or lower support level. A stop loss order should be placed a few pips above or below depending on the Stock Indices trade opened, just in case the Stock Indices price action breaks out of the range within these Bollinger bands.