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Scott,
Bollinger says these signals should always be filtered to determine if they are
continuation or reversal in nature by using a price indicator such as RSI or
MACD combined with a volume indicator such as On Balance Volume or Cash Flow.
Of course, this doesn't always work, but what does?
Bollinger offers a free pamphlet on his Bands as published at TASC at his web
site. I was going to send you the address but it has changed. Perhaps someone
else on the List has it. You may be able to find the article at TASC's site.
Scott Roycraft wrote:
> -----Original Message-----
> From: Tony Harring <greatsigns@xxxxxxxxxxxxxxxx>
> To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
> Date: Saturday, June 06, 1998 1:28 PM
> Subject: RE: MA Envelope
>
> |you should look at Bollinger bands. I use them and change the parameters to
> |18 and 1.8 instead of default 20 periods and 2 standard dev. When it gets
> |very narrow it is due for a breakout in either direction. tony
> |
>
> How can you tell which direction? I have noticed that some of the time when
> it moves
> outside the band it will pull back in forming a turning point. Other times
> it "slides" down
> or up the band continuing to make new lows or highs. About the only thing it
> tells me is
> like you said -- when it gets narrow some thing is about to happen. But I am
> constantly
> getting caught on the wrong side! There has to be something that can be
> combined
> with these bands to help in the direction of the break.
>
> Scott
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