New Twist on Using Bollinger Bands for Stock Trading
Many traders do not know that there are several variations of Bollinger Bands designed by John Bollinger. One of those is %B, which is a line indicator that can be used with Worden’s Time Segmented Volume to create a Hybrid Leading Indicator for Swing Trading, Day Trading, Momentum Trading, or any short-term trading style including Options Trading.
With Worden TC2000 Charting Software, traders have plenty of flexibility in setting up these indicators. Today, the example I am showing is the Time Segmented Volume Indicator TSV and %B within the same indicator chart layout, which provides a specific analysis that enables retail traders to interpret price and volume action in a unique way.
This approach is a TechniTrader exclusive format which completes the data set for fast, reliable analysis of both price and volume over time. The analysis is simple, straightforward, and easy to use.
Using Relational Technical Analysis™ which is the new approach to reading and interpreting stock charts, the goal is to identify harmonic patterns between Bollinger %B and Time Segmented Volume. This is just one of several different %B and Time Segmented Volume patterns that can be used for stock or option trading.
Harmonic patterns between %B and Time Segmented Volume indicate that there are Professional Traders controlling price at that time. Retail Traders should strive to trade with the Professional Traders rather than against them, which occurs most of the time with standard, basic retail trading systems.
The harmonic pattern is easy to see and provides the confirmation that Professional Traders are trading large lots using their proprietary trading venues and routing systems to control price entries. These are the most reliable of all momentum runs and offer higher profits with less risk and more consistent price patterns.
Here are some basic tips for reading Time Segmented Volume and %B harmonic patterns:
1. Time Segmented Volume should be slightly above %B for a confirmation of upside momentum building.
2. Time Segmented Volume should be below %B for confirmation of downside momentum building.
3. The closer the lines and the more in sync, the more harmonic the pattern.
Below is a chart showing a harmonic upside momentum building phase before the breakout. The stock has been in a tight consolidation for a couple days. Time Segmented Volume and %B start to sync with Time Segmented Volume above %B.
Martha Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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