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Wednesday, February 13, 2008

Breakout always happens after Bollinger Band Compression

The screen shot below shows a compression at point A and followed by a breakout at point B:





I have seen this so many times that I felt it worthwhile to put up a screen shot above.

The astute Range Trader should never put his Limit Orders inside the compressed Bollinger Band. Instead, put it at the previous peak in the amplitude as shown by the small square on bottom right above.

2 comments:

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