TechniTrader Stock Trading Education "Bollinger Bands® Improved"

New Twist Using Bollinger Bands® for Stock Trading

Many traders do not know that there are several variations of Bollinger Bands designed by John Bollinger. One of those is "Bollinger %B" which is a line indicator that can be used with Worden’s Time Segmented Volume TSV Indicator to create a Hybrid Leading Indicator for Swing, Day, Momentum or any short-term trading style, even Options Trading.

With Worden’s TC2000 Charting Software, Retail Traders have plenty of flexibility in setting up these indicators. Today, the example I am showing is Time Segmented Volume and Bollinger %B within the same indicator chart layout, which provides a specific analysis that enables Retail Traders to interpret Price and Volume action in a unique way.

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This approach is a TechniTrader exclusive format which completes the data set for fast, reliable analysis of both Price and Volume over Time. The analysis is simple, straightforward, and easy to use.
Using Relational Technical Analysis™ which is the new approach to reading and interpreting stock charts, the goal is to identify harmonic patterns between Bollinger %B and Time Segmented Volume Indicator. This is just one of several different Bollinger %B and Time Segmented Volume patterns that can be used for stock or option trading.

Harmonic patterns between Bollinger %B and Time Segmented Volume indicate that there are Professional Traders controlling price at that time. Retail Traders should strive to trade with the Professional Traders rather than against them, which occurs most of the time with standard basic retail trading systems.

The harmonic pattern is easy to see and provides the confirmation that Professional Traders are trading large lots, using their proprietary trading venues and routing systems to control price entries. These are the most reliable of all momentum runs, offer higher profits with less risk, and more consistent price patterns.
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Here are some basic tips for reading Time Segmented Volume and Bollinger %B harmonic patterns:

1. Time Segmented Volume should be slightly above Bollinger %B for a confirmation of upside momentum building.

2. Time Segmented Volume should be below Bollinger %B for confirmation of downside momentum building.

3. The closer the lines and the more in sync, the more harmonic the pattern.

Below is a chart example showing a harmonic upside momentum-building phase before the breakout. The stock has been in a tight consolidation for a couple days. Time Segmented Volume shown by the green line and %B shown by the blue line, start to sync with Time Segmented Volume above Bollinger %B.


Momentum is building within this tightening consolidation, and the pattern confirms this. The stock moves with sudden momentum as shown in the chart below.

TC2000 chart bollinger bands improved - technitrader

Summary 

Compression patterns and consolidations often break out suddenly without an easy way to identify the underlying momentum building that creates the energy. By using Time Segmented Volume and Bollinger %B together, the hidden momentum energy is revealed with the harmonic pattern.
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Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.

Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDs with every course.

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Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.