Bollinger Bands Squeeze Is a Strong Signal
I have already talked about Bollinger Bands Squeeze on this site, but that was a long time ago and maybe many of you have forgotten it:
- What Is Bollinger Bands Squeeze and How to Trade It?
- Bollinger Bands Squeeze: Great Indicator of the Market Indecision
- Bollinger Bands Squeeze on USD/JPY Weekly Chart
- Bollinger Bands Squeeze On USD/JPY Daily Chart
- Bollinger Bands Squeeze on USD/CAD Weekly Chart
When the Bollinger Upper and Lower bands become so close to each other, we call it Bollinger Bands Squeeze.
It occurs when a market becomes too slow and the price moves sideways and the distance of the sideways market high and low prices is very small.
Although traders like volatile and liquid markets, and so, they get upset when the markets become too slow and things like Bollinger Bands Squeeze form on the charts, that still is a good signal for the future strong movements and profits. Bollinger Bands Squeeze means a strong movement is on the way… get ready to make the most of it.
As you know, the price moves toward a special direction when a party takes the control. When buyers take the control and buy, the price goes up and when most people sell, the price goes down. When everybody sits on the fence and do nothing, the price moves sideways and doesn’t change that much. Under such a condition, the very slight price changes is related to the small transactions that have to be done by some parties, but big transactions by the big players like the central banks are stopped for some reason, and so the market has become so slow.
The big players stop buying or selling because they are waiting for some important events. They want the events to occur, and then they take their decisions based on the events outcome whether they want to buy, sell or do nothing again. When the big players are waiting and do nothing, the price goes sideways and Bollinger Bands Squeeze forms on the charts.
However, as I mentioned above, this cannot be continued forever and the sideways market will break suddenly and the price starts moving toward a special direction (either up or down) when the big players decided to enter and most of them follow the same route. For example, most of them buy a currency against another one, and so the value of that currency goes up.
The fact that Bollinger Bands Squeeze forms on the chart when the big players are waiting for something important to happen first, and then they take a special action, is the base of the strong movement after the Bollinger Bands Squeeze. When this strong movement starts, small players like retail traders can enter and make some money. Of course, if they take the proper position, otherwise they will lose.
Currently, some of the markets have formed Bollinger Bands Squeeze. Have an eye on them and take the proper position at the right time.
EUR/JPY is one of them:
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