Bollinger bands provide a user-friendly alternative to trend channels, revealing the range within which the price predominantly fluctuates. When working with Bollinger bands, you can rely on a signal: if the price significantly breaches the band, it typically tends to revert to the central indicator line.
What to do when you see this signal:
1) Add the Bollinger band indicator to the price chart.
Add an indicator
2) Wait when the price moves outside the indicator.
3) After the price has returned inside and a confirming candlestick has been closed we can open a deal directed towards the central indicator line.
Buying a call after the lower band breakout
Buying a put after the upper band breakout
The upper and lower Bollinger bands can be used as the levels of support and resistance.
What to do:
1) The price is closed at the upper/lower indicator line.
2) A new candlestick moves in reverse direction.
3) Wait for a confirmation and trade directed towards a central indicator line.
Buying a put after bounce off the upper band — resistance line