On the image above, observed those three black lines following the direction of the Forex market. These three black lines are what they call the "Bollinger Band". This is one of the best technical tool that help traders analyze the direction of the market trend. The middle line is called Simple Moving Average and the above and below lines are called Standard Deviation. The Bollinger Band's function is to plot the most high and low of the previous prices. It then creates a pattern which aids Forex traders in helping them to make decisions as to where the direction of the market will flow.
The image sample above is an example about How a Bollinger Band works. I encircled the part where the market bounced back for reversal. You must have noticed that the every time the candle stick reached the upper and lower Band the market trend reversed back.
The Bollinger Band is just a simple tool but it can provide accuracy in determining the direction of the Forex market. You can also combine this tool to any other indicator tools that you have and make your Forex Strategy produce better result.
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