Bollinger Bands Color Indicator
Platform: MT5 Type: Channel Last update: December 23, 2024The Bollinger Bands Color Indicator for MT5 not only helps to understand ongoing market volatility, but also marks different setups with distinct colors. Forex traders equipped with such readings, can act faster regarding bearish, bullish opportunities and also know when there is a neutral movement.
Example chart:
Understanding readings of the bollinger bands color indicator
Traditionally for this family of indicators, it consists of the central line and bands that expand and shrink based on the standard deviation. As a rule of thumb, a narrow channel reflects low volatility conditions, and conversely, wide bands suggest high market volatility. When it comes to trading, the approach also involves candlesticks alignment.
In order to understand the provided colors, you must pay attention to location and setup of candles in relation to bb channel. When these bars are in the upper half and actually move outside the upper band, the area is highlighted in blue. On the other hand, when the opposite scenario happens, it gets red. When bars stay inside, this just mean a neutral reading and is marked with gray.
How to trade effectively?
The recommended strategy is to play only in the agreement of the colored signals, however for entry points use the middle moving average. When price moves near it, watch closely the price action and when continuation pattern forms, jump into a trade in the original direction.
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