Trade Stock Indices

Bollinger Band

Derived from the original and initial Bollingers.

The Bollinger Fib ratios show how much prices change, but instead of using standard deviation to measure band width, it uses a smoothed ATR multiplied by Fibonacci ratios of 1.618, 2.618, and 4.236.

The smoothed lines, when multiplied by Fibonacci ratios, are subsequently either added to 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 the trading price of stock indices touches a line & changes direction, then a signal to trade is generated.

But, it's good to use this signal with other tools like the moving average to be more sure of the signal, as shown in the picture below.

Bollinger Bands: Fibo Ratios Trading Indicator Analysis

Technical Analysis in Indices Trade

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