434# Not so squeezy
Bollinger Squueze Trading Method
Submit by Stowed 11/02/2013
The Bollinger Squeeze is far from a new concept, indeed it is as old as the Bollinger Bands themselves, combining them with the Keltner channels is a slightly newer concept, but again not something that isn't widely used, we are not trying
to break new ground, we are just trying to find something that will tell us when the market has stopped to think, and I have found nothing better. Now before you all go off excitedly, there is one major flaw in the Bollinger Squeeze, Keltner Channel method, while it provides excellent timing, it doesn’t indicate the most important factor, that being direction. Times when volatility is so low give little to indicate which way the market will go. The reason why is the very reason the squeeze is in place in the first place. It is because everyone has stopped to think, as they try to figure out which way the next strong push should go.The decision may be that change needs to be made, or it may be that things were fine the way they were, it is something we will explore a little later.
Indicator 2: Rainbow Multiple Moving
Measures: Trending vs Ranging conditions
The next indicator used is something I call the Rainbow
Multiple Moving Average (RMMA). It is, essentially not really
an indicator in the traditional sense, it is actually just eighty
eight Exponential Moving Averages (EMA's), all on the same
chart coloured like a rainbow, hence the name.
In the picture Not so squeezy forex system in action.
Indicator 3: Simple Moving Average (SMA)
Settings: 100SMA and 200SMA on Close
Measures: Support, Resistance and Barriers
Moving averages are very commonly seen in most systems,
usually either as an indication of trend, or used as an entry
signal when one moving average crosses over another. The
RMMA above of course takes this to the extreme, using 88
different averages to paint a picture of the trend, however
using moving averages as crossover entry signals alone has
been proven time and time again to be slow and clumsy,
especially in ranging conditions.
Another use however is to use these averages as dynamic
support and resistance areas. You may be familiar with
straight line trend lines acting as support and resistance
areas, but Moving Averages work just as well, if not better
Indicator 4: Bollinger Bands
Measures: Overbought, oversold conditions
It may seem odd that we are essentially, using the Bollinger
Bands twice in the system, once with the Keltner Channels
to define the squeeze and again here. However they have
two distinct uses.
Anyone who has used oscillators know the concept of
overbought and oversold conditions. Oscillators attempt to
tell us when price is relatively oversold or overbought
compared to recent history. Once these conditions are met,
then we are taught to look for a reversal in price. 4
for more read pdf..
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