Coaching Corner: How to Trade Using Bol ...

Coaching Corner: How to Trade Using Bollinger Bands

Sep 22, 2023

This week's market volatility has made for a difficult trading environment. On the other hand, the volatility has created some interesting technical developments, which are worth exploring in detail.

One of them is that the S&P 500 Index (SPX) is trading outside its lower Bollinger Band. That particular development is often a prelude to an important trading bottom.

You can see that in the chart above, especially in the zoom thumbnail on the right side. The lower Bollinger Band is the green line below the price. In the chart the band is at the 4355 price point while the price of SPX is at 4351.

When you look at the near 30 reading on the RSI indicator you can see the index is oversold.

As a result, instead of panicking, we should be looking for more signs of a bullish reversal.

In the video below, I explain in full detail how you can use Bollinger Bands as analytical tools as well as to enter trades at bullish turns and exit them at bearish turns based on where the market and individual stocks are trading in relationship to the bands.

In the video, I also follow up on my thoughts about the current situation in the bond market, which I first detailed in this post, which I recommend if you haven't seen it.

Let me know what you think of this video. And if you like it, hit the like button.

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