Bollinger Band

Derived from the original and initial Bollingers.

The Bollinger Fib ratios is a volatility based indicators but it doesn't use the standard deviation to calculate width of bands instead it uses a smoothed ATR that are multiplied with Fibonacci ratios of 1.618, 2.618, and 4.236.

The smoothed lines that are multiplied with Fibonacci ratios are then added or subtracted from the Moving Average.

This forms Three upper Fibo bands and 3 lower Fibo bands

Middle band forms the basis of the trend.

Bollinger Bands: Fibo Ratios Trading Indicator Analysis

Technical Analysis and How to Generate Trading Signals

This indicator used to identify point of support & resistance for indices.

Lines below represent support levels while those above are resistance areas.

The outer-most bands provide the strongest resistance/support.

The inner most bands provide least support/resistance.

The innermost band represents Fibo 38.2 % retracement level

The second band represents Fibo 50 % retracement level

The outermost band represents Fibo 61.8 percentage retracement level

The indicator is used to identify points where indices trading price might reverse. (Price Pull-back Levels)

When stock indices trading price hits one of the lines & reverses then an entry or exit trading signal gets generated.

However, it's always good to combine the signal with other confirmation indicators such as the moving average to confirm the signal such as illustrated and shown below.

Bollinger Bands: Fibo Ratios Trading Indicator Analysis

Technical Analysis in Indices Trade

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Bollinger Band

Technical Analysis and How to Generate Trading Signals