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Bollinger Bands

Indicator guide

Bollinger Bands are a volatility-based overlay that helps you gauge market conditions, spot overbought/oversold zones, and plan breakout trades. On FX Replay, they’re perfect for swing setups, mean-reversion plays, and breakout timing.

Bollinger Bands – FX Replay User Guide

Bollinger Bands are a volatility-based overlay that helps you gauge market conditions, spot overbought/oversold zones, and plan breakout trades. On FX Replay, they’re perfect for swing setups, mean-reversion plays, and breakout timing.

How They Work

  • Middle Band: Simple Moving Average (SMA), typically 20 periods
  • Upper Band: SMA + 2 × Standard Deviation
  • Lower Band: SMA – 2 × Standard Deviation The bands expand and contract with price volatility.

How to Read Them on FX Replay

Volatility Gauge

  • *Wider Bands → *Higher volatility
  • Narrow Bands (“Squeeze”) → Low volatility, breakout brewing

Overbought / Oversold Zones

  • Price near Upper Band → Potential overbought condition
  • Price near Lower Band → Potential oversold condition

Trend Direction

  • Rising SMA → Uptrend bias
  • Falling SMA → Downtrend bias

Actionable Use Cases

  • Swing Trading: Buy near Lower Band, target Upper Band — works best in range-bound markets (consider 1.5 SD bands for tighter control).

  • Trend Following: In strong trends, enter pullbacks to the Lower Band (uptrend) or Upper Band (downtrend). Avoid fading the trend.

  • Bollinger Squeeze Breakouts:

  • Look for tight band contraction → signals breakout potential.

  • Entry Triggers:

  • Long: Break above Upper Band during a squeeze

  • Short: Break below Lower Band during a squeeze*

  • Combine With Other Tools: Add volume or momentum indicators (e.g., RSI, MACD) to confirm breakout strength, and align band reactions with key support/resistance levels. ‍

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