When this happens, it is referred to as "building cause." This is the calm before the storm. Let me stop there, I feel myself starting to reveal aspects of the trading strategies. … Take a look at the example below and notice the tightening of the bollingerbands right before the breakout.We look at whathappens in these conditions. … We can create trading system based on bollingerband breakouts after a squeeze. A squeeze of bollingerbandhappenswhen it tightens and both upper and lower band come very close.
(2) Bollingerbands (b-bands) are tightening on the 4-hour chart (as shown by the gap between the magenta arrows): However, the 4-hour chart is quite a short time frame. … The question is when will that change happen, and also if it's announced suddenly then price could spike up on the...Figure 3: Bollinger’s brainstorm. Asking the market what is happening is always a better approach than telling the market what to do. … The market most often starts off in the wrong direction after the bandstighten prior to really getting under way, of which January 1991 is a good example...Many times, large rallies begin from low volatility ranges. When this happens, it is referred to as "building cause". … The bands begin to tighten. This type of squeezing action of the bollingerband indicator foreshadows a big move.
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• Sharp moves often occur after the bandstighten towards the moving average, as the price is less volatile. … When the BollingerBands become very narrow this is a sign that the price is consolidating and volatility has become extremely low.Now whathappenswhen the market trends beyond the BollingerBands? Hopefully your bounce strategy’s filters would have prevented you from getting into that trade, or else you would have been stopped out.Interesting how those BBands are coming together right when the cycle ends and a new one begins. … Well that Jnug drop happened a day later than I thought. Now the question is, whathappens tomorrow.