MaestroTrader

ATR on Double Bollinger Bands (BB)

ATR Coupled with Bollinger bands helps you to time the Entries & Exits.
The combination of two Volatility Indicators ATR & Bollinger bands captures cyclical behavior of the market.
This Indicator helps you to identify the range contraction & range expansion for trades & signals reversal signs

ATR - Double Bollinger Bands (BB) indicator plots Two Bollinger Bands on ATR Indicator.

ATR - Double Bollinger Bands (BB) indicator plots Two Bollinger Bands on ATR Indicator.
Markets go through cycles of contraction and expansion. Range Expansion is identified when ATR is rising above the ATR average. Range Contraction is identified when ATR is falling below ATR average.
Whenever the market is contracted, then comes the range expansion so these signals can be used for entries & exits.

The average true range is a volatility indicator. Volatility measures the strength of the price action and is often considered for clues on market direction
This is the combination of two Volatility Indicators ATR & Bollinger bands to capture cyclical behavior of the market.

How to use the indicator for Entry & Exits ?
  • When ATR is below Bollinger band basis line and closer to the lower band that indicates the range contraction, so traders can expect the range expansion soon & entering long positions becomes a safe bet.
    When ATR is touching the upper Bollinger band (2 standard deviation) that indicates range expansion so closing a long position or booking partial profits becomes a safe bet, because the stock is likely to enter a trading range or reverse direction at this point.

    When ATR is outside the upper Bollinger band , avoid long trades as range contraction expected soon.
    Reversals - A reversed trend is expected when price touches its extreme outer bands. it is always a good practice to confirm reversal signals with more than one indicator signals.

    A prolonged period of low ATR values may indicate a consolidation area and the possibility of a continuation move or reversal.



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