Trading with Bollinger Bands Shapes -- with David Moadel
hello and welcome to looking at the markets with david modell i wanted to talk about
the shapes that bollinger bands are making all right because oftentimes people will talk about
where the candle is like the candle might break below the lower bollinger band or the candle might
break above the upper bollinger band okay and that's worth looking at for sure but people don't
always talk about the actual shapes that the lines are making all right so i found this chart on a
financial forum like a discussion board so i will put a link in the description below this video if
you want to click on that just to find out where i got this chart from because i want to give credit
to uh you know where i found it from all right so i did not create this this chart here and also
please be aware that these patterns do not always work they are not perfect they are not guaranteed
to work at all all right so make sure you do your own due diligence and be careful out there okay
so uh the idea here is that really the only two interesting ones are the top two number one and
number two here uh so supposedly no guarantees but supposedly uh when you have uh the bollinger bands
going sideways you know like horizontal okay and then the upper bollinger band
uh curls upwards and the lower bollinger band curls downwards all right uh kind of like a
bollinger band squeeze and then a widening or expansion right when that happens supposedly
if the candle breaks below the lower bollinger band
then that is supposed to be extremely bearish okay now on the other hand if you have the two lines
going sideways or horizontal uh and then the upper band goes up and the lower band goes down
uh if the candle breaks above the upper band that is supposed to be extremely bullish okay and i'll
show an example of what that looks like here this is jpmorgan stock daily candlestick chart
from tradingview.com and here we have the candles within the bands and you notice that they're going
sideways or horizontally and then look at the upper bollinger band it goes from horizontal to
curling upwards and then the lower band goes from horizontal to curling downwards at the same time
okay so that is similar to to this pattern okay number two here because you also have a
break above at around the same time that that that the shape is happening in the lines in the bands
all right and there it is and that could be a signal and notice that the stock went upward
uh went up quite a bit after that again this does not always work perfectly like this all right so
no guarantees here all right and the idea is that if it had broken down below around here
then it might have kept going downwards all right that might have been extremely bearish
right so i want you to perhaps get in the habit if you're a bollinger bands trader to start looking
at the shapes of the lines now you have these six other ones here number three four five six
seven and eight uh but these to me would be less interesting but i'll let you look at it
right now if you want to so supposedly according to this chart if the bollinger bands are just
going sideways or horizontal then if there's a break below the lower band that's only slightly
bearish and if there's a break above the upper band that's only slightly bullish
and so what do you do with that information i don't know it doesn't sound really very tradable
to me what about if the bands are going sideways or horizontal and then they curl inwards towards
each other upper band goes down lower band starts to curl up well again not not a super not a super
powerful signal according to this chart slightly bearish if it breaks below the lower band slightly
bullish if it breaks above the upper band and then you've got these two down here where you have uh
one of the bands just going sideways horizontally and the other one breaking uh you know
well in number seven you have the upper band going sideways and the lower band breaking down
uh downwards and then with number eight you have the lower band going sideways and the upper band
breaking or curling upwards okay and then number seven you have a break down with the candle then
number eight you have a break out with the candle break up but again only slightly bearish here
and then slightly bullish here so maybe not so interesting as a trader you can certainly try
any of these though just be very careful i recommend if you're going to try it try it with
demo or virtual trading don't use real capital make sure that it works before you actually
uh attempt anything in real life okay so i'm kind of looking at these two shapes actually
they're the same shape aren't they with the lines all right but then these two patterns a breakdown
and a break above could be as in like with jp morgan stock here could be pretty interesting
you might want to consider using this with other indicators maybe and just use your own judgment
before you trade anything all right so i hope this was helpful to you and if you'd like more
help with trading or investing i do offer coaching you can email me for the coaching at david modell
gmail.com and i'm going to keep on looking for interesting things in the markets that might
work for you thank you so much for watching and listening i will talk to you again soon
you