Double Bollinger Bands Trading Idea -- with David Moadel
hello and welcome to looking at the markets with david modell i want to give you
an idea that you can test out with virtual or demo trading and this idea does not work perfectly it
does not work 100 of the time so if you're going to test it out don't test it with real money okay
demo trading only all right so uh it's if you look at all these candles this is tradingview.com it's
apple stock the three-minute candlestick chart if you look at all these candles which one stands
out the most to you well to me it's this one right because it went way below the bollinger bands here
all right and it has this long lower wick or shadow uh also notice that it even uh touched
the lower band on the three standard deviation bollinger bands because on trading view here i
have two sets of bollinger bands i've got the and they're both on this standard 20 period
uh look back period okay so i've got the two standard deviation bollinger bands here and
here okay those are the narrower bands right and then i've got the wider bands the three standard
deviation bollinger bands here and then all the way down here all right those are the wider bands
and the candles don't touch the lower three standard deviation bollinger band it's not
going to touch it very often so it's pretty significant when it does that means it's probably
short-term oversold meaning short-term cheap and should you buy it there well not necessarily but
what if also what if you got the wick the lower shadow the lower wick of a candle
yes touching or even going below that three standard deviation lower bollinger band which
doesn't happen very often okay it touched it here it actually went below it uh but then you get that
interesting looking candle that really stands out where you have no upper wick you know or
very little in this case no upper wick or shadow at all and you've got a long lower wick or shadow
longer than the body right this is the body of the candle and look how long this lower wick is
longer than the body itself right so that's oftentimes a good sign now you probably want to
use other indicators you know maybe put a moving average up there and make sure that the candles
are above the 50-day moving average or the you know or 50 period moving average or the 100 or
200 whatever it is to make sure that you are still an uptrend and you're not in some sort of crash
mode right because you probably don't want to you don't necessarily want to trade if you really feel
that the market is crashing that may not be the best time to take a long position to buy right
so if you're using other indicators and just using your common sense this can be fairly uh consistent
does not work perfectly does not work 100 of the time but when you get one of these candles
with a long lower wick no upper wick or hardly any upper wick the wick is longer than the body and it
touches that lower three standard deviation bulger band which doesn't happen very often okay i mean
notice it went up when this happened okay let's see if it happens again well here it is again
right you got the lower wick and not much upper wick here at all that lower wicker shadow is it's
longer than the body and it touched that three standard deviation lower band there lower bulger
band doesn't happen very often and when it did you know boom right doesn't always happen like that
what about this one well i don't like it as much yes i like the way it touched that lower three
standard deviation lower bollinger band but that wick isn't very long the body is longer than the
wick all right i mean it still went up somewhat but it doesn't seem as powerful here let's see
what about yeah same with this one that lower wick is smaller than the body so it just doesn't seem
very powerful there so let's keep looking find another example here oh well here are two examples
look at that bounced right off of it boom up right look how long that lower wick is and it touched
the lower bollinger band three standard deviation and then did it again here all right it went up
did it again here look how long that lower wick is hardly any upper wicks on these none at all here
and then barely an upper wick here and then boom again right boom and then boom uh i'm not saying
it always happens like this but it's something to think about something to look at it doesn't happen
that often although well look at this it happened twice in a row practically all right so uh and
this is on a three minute candlestick chart you could test this out with demo or virtual trading
on almost any time frame i think daily candles if you're more of a swing trader that kind of thing
one minute candles if you're a short-term scalper so try it out all right 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 hey i want to thank you for watching and listening i will talk to you again
soon
he was the best