Bollinger bands and Moving average indicator
Bollinger bands indicator forex consists of 3 bands
1. Upper bands is standard deviation plus 20 day SMA simple moving average
2. Middle bands is Simple moving average indicator SMA 20 days
3. Lower bands is 20 days Simple moving average indicator SMA minus 2 standard deviations
Standard deviation indicator forex gives a right indication of volatility. Standard deviation makes bollinger bands react quickly to high and low volatility and to price movements. Closing prices are usually used to set indicator bollinger bands. Different settings can also be used. The length of number of deviations and indicator moving average can e adjusted to better preferences and characteristic of market price.
The majority of price action should covered by bollinger bands, but not all. Penetration of the indicator bollinger bands is normal after sharp moves. A longer moving average indicator may be required before the market price move to penetrate the bollinger bands often. If the forex prices reach the bollinger bands rarely , then a shorter indicator moving average may be required.
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Forex is simple follow the trend and you will rich.
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