Boillinger
Bands
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to trade 
Boillinger Bands
Bollinger bands measure a market’s volatility meaning,
it gives us an indication of weather the market is active
or not active. The less active the market the closer the band
or lines will be. Which means the further the bands are the
more active the market is.
For Example:
The Bollinger Bounce
You'll notice with the Bollinger Bounce the candlesticks
will go back the the center of the bands, giving you and idea
of what will happen next.
These bounces act like support and resistance levels. The
longer the time frame within, the stronger these bands are.
Many traders have created systems that only use these retracements
(bounces). This strategy is used when there is no clear trend.
Bollinger Hour Glass
The Bollinger Hour Glass is pretty self explanatory. When
the bands “neck down” together, it usually means
that a breakout is going to occur. If the candles start to
break out above the top band, then the move will usually continue
to go up. If the candles start to break out below the lower
band, then the move will usually continue to go down. Looking
at the chart above, you can see the bands squeezing together.
The price has just started to break out of the top band. As
you can see from the chart above and below the trend start
to go up.
Was example was on the 15 minute chart.
MACD
MACD is an acronym for Moving Average Convergence Divergence.
This technique is used to identify moving averages that are
indicating a new trend, whether it’s bullish (up) or
bearish (down). After all, the trend is our friend and being
able to find a trend, is where the most money is made.
Usually you'll see three indicators for the MACD. The first
is the number of periods that is used to calculate the faster
moving average, the second is the number of periods that is
used in the slower moving average, and the third is the number
of bars that is used to calculate the moving average of the
difference between the faster and slower moving averages.
Example, if you were to see “12,26,9” as the
MACD parameters (usually default).
-12 equals the 12 bars of the faster moving average.
-26 equals the 26 bars of the slower moving average.
-9 equals the 9 bars of the difference between the two moving
averages.
The vertical lines are called histogram (The blue indictors).
The two lines that are drawn are NOT moving averages of the
price, but the moving averages of the difference between two
moving averages.
In our example above, the faster moving average is the moving
average of the difference between the 12 and 26 period moving
averages. The slower moving average plots the average of the
previous MACD line. Once again, from our example above, this
would be a 9 period moving average. This means that we are
taking the average of the last 9 periods of the faster MACD
line and plotting it as our “slower” moving average.
What this does is it smoothes out the original line even more,
which gives us a more accurate line.
The histogram simply plots the difference between the fast
and slow moving average. If you look at our original chart,
you can see that as the two moving averages separate, the
histogram gets bigger. This is called divergence because the
faster moving average is “diverging” or moving
away from the slower moving average. As the moving averages
get closer to each other the histogram gets smaller. This
is called convergence because the faster moving average is
“converging” or getting closer to the slower moving
average. And that, my friend, is how you get the name, Moving
Average Convergence Divergence! Whew, I need to crack my knuckles
after that one.
MACD Crossover
Because there are two moving averages with different “speeds”,
the faster one will obviously be quicker to react to price
movement than the slower one. When a new trend occurs, the
fast line will react first and eventually cross the slower
line. When this “crossover” occurs, and the fast
line starts to “diverge” or move away from the
slower line, which often indicates that a new trend has formed.
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