Creaky sliding medium: What are the bands of the cryptonger - Bits Media

Any cryptocurrency holder would like to know for certain: what will happen to the price in all 100% cases of its change. Alas, Similar is unrealistic. But there is an indicator, which covers 95% price movements. These are lanes of the Bolinger.

What are the lanes of the Bolinger

Stripes (ribbons, Lines) Bolinger (Bollinger Bands or BB) - This is an indicator of technical analysis, which is aimed at determining the trend of one or another cryptocurrency, as well as measuring its volatility. The term was embedded in John A. Bolinger (John A. Bollinger) In the late 1980s-early 1990s.

Purely visually the lanes of the Bollinger are a channel, which expands or narrows depending on changes in the price of a particular cryptocurrency. It is the width of the channel that is a reflection of that volatility, which is present at a particular moment in the market.

And how to build a band of a bellinger?

Building the lanes of the Bolinger

The indicator is three lines. Average = nothing else, like an ordinary sliding average. So it is originally established by the Creator. In some terminals, it is possible to replace with exponential (EMA) or balanced (WMA) sliding average. Moreover, the effectiveness of the replacement is quite controversial.

Since we have a sliding average, then for her I need a period, for which she will be calculated. Bolinger used a 20-day interval, which is installed by default in the settings. And then everyone can experiment and set at least the smaller, at least a more time period. It all depends on your style of trade and specific cryptocurrency, which you are trading.

The upper and lower lines are the same sliding medium, just shifted by several squares (standard) deviations. Bolinger used the parameter, equal 2. truth, He wrote this in relation to the stock market: There were no cryptocurrencies in the 80s and early 90s. maybe, Given the volatility, For digital assets, three or five medium -ry deviations are more suitable. Again, Everything is individual.

To calculate the sliding medium and medium -ry deviations manually makes no sense. In any, Even the most ordinary, The trading terminal is done automatically. You just have to set the parameters necessary for your trading system.

And how to use a band of a bellinger?

The use of lanes of the Bolinger

The use of the indicator will be different for lateral and trending movement. In the first case, the price of cryptocurrency will not mainly go beyond the channel (beyond the boundaries of a sliding average). In this case, the tactics are very simple: When reached the price of the lower strip - buy. When reaching the upper - to sell. In this case, the inclination of all three lines is practically absent.

The second situation is trendy. It is accompanied by the expansion of the channel and an increase in the angle of inclination of a median sliding medium. With trend, the price can often rise above the upper boundary of the lanes of the Bolinger (In the case of a bull's trend) or below the lower (With a bear trend). Trade will be built from the median strip. If we have a bull trend, then it is the level of support, and with each price reduction to it - you can buy. Обратное действительно для медвежьего тренда. Медианная полоса является уровнем сопротивления. При каждом достижении ее ценой криптовалюты – можно продавать.

По завершении тренда, usually, Something like a side of the side is formed again, and the lanes of the bellinger are narrowed.

Consider several typical examples. In May-July 2023 year at Ripple cryptocurrency (XRP) Flat was formed (Side movement). Respectively, it was possible to buy when breaking through the lower strip and sold when breaking through the upper. In the figure below arrows, moments are noted, when it was possible to make transactions.

Source: tradingview.com

Now consider the formation of the trend. As an example, take the situation with bitcoin in January 2023 of the year. Since the end of November, a certain side of. 10 numbers the price goes beyond the upper border, but there is still no channel expansion as such. And here 11 the numbers both factors coincided and it was possible to buy BTC. As can be seen from the schedule, In the future, it was quite possible to make money on a transaction about 40%.

Source: tradingview.com

John Bolinger paid special attention to W- and M-shaped formations. Consider, How it acts in cryptocurrency.

W- and M-shaped models

These are two U -turning models. W-shaped is a bull signal. She appears, When, after a decrease, we reach local minimums twice, And then growth begins. M-shaped model-Bear in the opposite of W-shaped. Its occurrence is accompanied by a double achievement of local maximums, After which the turn begins or the transition to the side.

Bolinger believed, that classic models of this type are then obtained, when the first extremum goes beyond the stripes, And the second is within the channel.

A similar situation has developed in Litecoin in February 2023 of the year. Then, After growth 1 february, The price went beyond the bolinger's stripes, but 16 February remained inside the channel. After that, the decrease began.

Source: tradingview.com

For all the popularity of the lanes of the Bolinger have a number of minuses.

Disadvantages of the lanes of the Bolinger

First The disadvantage is the subjectivity of the assessment. Ideal pictures, which are described by Bolinger, There are extremely rarely. Moreover, Often they can only be obtained post -fact. When interpreting specific signals, much will depend on the trader. Someone will decide, what, eg, the channel narrows or expands, but for another it will not be a signal at all.

Second, What should be noted: Ballinger stripes do not give clear entrance points. In general, this is intertwined with the first item. Bolinger's stripes are a statistical guideline, which covers 95% all prices of a particular tool. The trader will have to interpret it on your own. Ideally, combine this indicator with other tools of technical and fundamental analysis.

Third Minus - you will have to configure strips. T parameter, which are set by default, may not approach a specific cryptocurrency and your style of trade. To find the optimum, you will most likely have to fill a single bump.

Conclusion: Bolinger's stripes - a tool for measuring price volatility and determining the trend in cryptocurrency. The success of use depends on the point settings and the style of trading of a particular trader.

This material and information in it is not an individual or other other investment recommendation. The view of the editorial office may not coincide with the opinions of the author, analytical portals and experts.