(10) Bollinger Bounces Occur More Quickly Near Outer Bands
It is one of the most surprising tips for day trading with Bollinger bands. Bollinger bounce is the returning back of price towards middle band after reaching outer bands (either upper band or lower band).
If the price is reached the top of the Bollinger band then it is likely to revert back to middle band due to resistance levels on higher side.
Similarly, if the price is reached the downside of the lower band then it is likely to revert back to middle band due to support levels on lower side.
This bouncing continues until a strong breakout happens on either side. But, this bouncing of prices between two bands occurs more quickly near outer bands.
This provides a good trading opportunity to day traders to generate profits quickly. Sometimes, this trading pattern may extend into strong trend further.
Therefore, day traders are required to keep stop loss order at the right price to prevent unexpected losses.
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