The Chinese name of the path indicator BOLL: Bollinger Band. This indicator is obtained by first calculating the “standard deviation” of the stock price, and then obtaining the “confidence interval” of the stock price. This indicator and the MIKE indicator are both “path indicators”, and foreign exchange and stock prices are also volatile. Within the range of the upper limit and lower limit, BOLL has only one “upper limit” and one “lower limit”, and a stock price average line must be drawn on the actual graph.
The BOLL indicator is a commonly used technical indicator in stock technology, the Chinese name Bollinger, invented by Mr. John Brin in the 1970s.
The BOLL indicator can be used as a separate trading system, which is difficult to match with other technical indicators in stock selection and trading. The original intention of BOLL indicator design is to pursue “relative perfection”. Its goal is not to help users find the lowest buying point and the highest selling point. Instead, it uses the BOLL indicator channel as the framework, based on the position between the stock price and the BOLL line. Relationship, find a “relatively perfect” transaction that can be accepted.
Bollinger Bands (BOLL), it represents the trajectory of stock prices moving around a certain interval, and technically used to make judgments on buying and selling points has a certain reference value. Its theory is that the movement of stock prices always fluctuates within a certain range around a certain value center (average line, cost line, etc.), that is, the stock price fluctuates around the middle rail.
It is mainly composed of three lines: upper rail (yellow line of BOLL line), middle rail (white line of BOLL line), and lower rail (purple line of BOLL line).
Next, I will introduce to you the five forms of Bollinger Bands.
- When the upper, middle and lower trajectories of the BOLL line are moving upwards at the same time, and the stock price remains fluctuating in the long area, it indicates that the stock price is very strong and will continue to rise in a short period of time. Investors should hold shares at this time Buy on ups or dips. When the stock price is in an upward trend, the price will constantly touch the upper line, break through the upper line from time to time, and jump out of the upper line. When the stock price goes out of track, it is often only a signal that the trend continues to rise, not a reversal signal.
- When the upper, middle and lower trajectories of the BOLL line are moving down at the same time, and the stock price remains fluctuating in the short range, it indicates that the stock price is very weak and will continue to fall in a short period of time. Investors should hold currency at this time Wait and see or sell on rallies. When the stock price is in a downward trend, the stock price will continue to touch the lower trajectory. At the same time, the price often falls below the lower trajectory. In most cases, this is only a signal that the trend continues to fall, not a reversal signal.
- When the upper trajectory of the BOLL line runs upwards, while the middle trajectory and the lower trajectory run downwards at the same time, it indicates that the stock price will experience a round of decline; conversely, the lower trajectory of the BOLL line runs downwards while the middle trajectory Moving upwards at the same time as the upper track indicates that the stock price will experience a round of rise.
- When the upper, middle, and lower trajectories of the BOLL line are running in the horizontal direction almost at the same time, the stock price is likely to enter the consolidation zone and will maintain a certain period of time. In the transaction, you can choose to hold the currency and wait and see or switch to a box trading strategy. At this time, the pressure and supporting effect of the upper and lower rails of the BOLL line will appear. Investors who like to do short-term trading often use the lower rail of the BOLL line as a buying point, and the upper rail as a selling point to buy low and sell high.
- When the stock price rises or falls rapidly and sharply, the stock price will deviate from the operating channel constructed by the upper and lower tracks of the BOLL indicator, and run outside the upper or lower track, which is an extreme market.
The departure of stock price from the channel is an unconventional state, and many investors will consider it an excellent buying opportunity or selling opportunity. However, after a large number of cases have proved that the stock price trend tends to continue after the emergence of extreme market conditions. Even if it returns to the channel within a short period of time, it is difficult for its operating trend to change quickly.
Although the BOLL indicator is simple, how to use it is extensive and profound. The simple three lines can clearly show the current market status. The BOLL indicator can indicate support and pressure levels, and display overbought and oversold, as well as trends and channels. It has multiple functions and is very effective and simple to use. The BOLL indicator can be widely used in most financial time series, including but not limited to stock analysis, and has a good guiding role in investment targets such as foreign exchange, options, commodity futures, and stock index futures.
The shape and significance of the bell mouth of the Bollinger Band
In the process of stock price movement, the three-track Bollinger Band will deduce different curves with the continuous changes of stock price, and the three curves will naturally form different combinations according to the different stages of stock price movement. Different combination forms represent different operating trends of the market. The following is a detailed explanation of the three forms of open flares, closed flares, and tight flares formed by the three Bollinger tracks, in order to understand and master the three The different market meanings of these forms, timely seize market opportunities and avoid market risks in time.
⑴Open-type bell mouth
The open horn refers to the stock price breaking through the mid-to-long-term consolidation zone, driving the Bollinger Band to move upwards away from the middle rail, while the lower rail reversely moves downwards and away from the middle rail, forming a horn-like shape. Open trumpets often appear in the early stages of skyrocketing prices, indicating that the strength of the bull market is gradually becoming stronger, and the strength of the bears is gradually declining, and the stock price will start a larger rise in the market. It is the best intervention point for band operations. To confirm the reliability and signal strength of the open-type bell mouth, pay attention to the following three points:
A. After a wave of long-term decline and consolidation, the stock price has completely exhausted, the stock price fluctuates very little, and the Bollinger Band has gradually narrowed from wide. The greater the decline, the longer the time, and the narrower the channel, the higher the reliability of the later open-type horn, and the stronger the rising signal strength.
B. The stock price must be effective and suddenly stand on the Bollinger Middle Rail, and the Bollinger Middle Rail will rise up, and the short-term price moving average will go up.
C. In the initial stage of forming the bell mouth, the amount of energy must be significantly enlarged
⑵Close-up bell mouth
The closing bell mouth means that after a wave of strong rise, the upper Bollinger rail begins to turn around and approaching the middle rail, while the Bollinger lower rail continues to move upward and close to the middle rail. At this time, the Bollinger three rails form a gradually contracting closing. Type bell mouth. Closing horns often appear at the end of a wave of rising, which means the beginning of short-term adjustment. Investors must avoid risks in time. To confirm the reliability and signal strength of the closed bell mouth, pay attention to the following two points:
A. The larger the previous rise and the faster the rise, the higher the bearish reliability of the closing bell and the stronger the downward signal.
B. The Bollinger Band has clearly fallen downward, the stock price has fallen below the short-term price moving average, or even the mid-range price, and the short-term price moving average has crossed downward.
⑶Tight mouth type bell mouth
Tight-mouthed bell mouth means that when the stock price has gone through a long period of decline, the short side gradually collapses, the decline slows down, and the stock price starts to show signs of stabilizing. Gradually turn the head upwards, and both lines move closer to the middle track. At this time, the three tracks of the Bollinger Band form a tight-mouth bell mouth that is similar to gradually shrinking. Tight-mouthed horns often appear at the end of a wave of long-term declines, which means that the decline is nearing the end and the market will enter a long-term consolidation and bottoming process. At this time, investors mainly wait and see, waiting for the trend to become clear. To confirm the reliability and signal strength of the tight-mouthed horn, pay attention to the following three points:
A. Has the stock price gone through a long period of decline?
B. Is the distance between the lower rail and the middle rail on the Bollinger Band getting smaller and smaller
C. Whether the trading volume is shrinking for a long time, it is best to reach the sesame point
Why is the 5th line used together with the Bollinger Band?
- While the stock price has been falling continuously, it is in MACD’s deadlock adjustment. At this time, the stock price suddenly stands on the 5-day line from the lower rail, and then MACD formed a golden fork, then this is the best time to buy.
- When the stock price did not form a dead fork in MACD, when the stock price broke above the middle rail line and stood on the 5-day line in one fell swoop, MACD formed a buy signal for the golden fork, which is a good buying opportunity.
- When the stock price is running near the upper trajectory, when the K-line falls below the upper trajectory, the stock price begins to adjust downwards, and it will rebound and rise when it crosses and stabilizes on the 5-day line. Therefore, we must be optimistic about whether there is a strong 5th line. Standing firm is the opportunity to intervene, and it is time to stop the loss if it falls below.