Bollinger Bands Price Action in Ranging Trading Markets

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

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

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

If the stock trading market stock price touches the upper band it can be considered overextended on the upside - overbought.
If the stock trading market stock price touches the lower band the stock price can be considered overextended on the bottom side - oversold.

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

If stock 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 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 Trading Markets

Bollinger Bands in Ranging Trading Markets - Bollinger Bands Strategy

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

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

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Bollinger Bands Price Action in Ranging Trading Markets