Bollinger Bands Breakout Trading Strategy

Buy Signal: When the current closing price of the asset falls below the lower Bollinger Band, it indicates that the asset’s price is relatively low compared to its recent price range. This situation suggests a potential buying opportunity as the price might be oversold, and a reversal or bounce back is expected. Traders may consider initiating a “Buy” position at this point, expecting the price to rise back toward the middle or upper band. Sell Signal: Conversely, when the current closing price of the asset rises above the upper Bollinger Band, it suggests that the asset’s price is relatively high compared to its recent range, indicating a potential overbought condition. Traders may consider initiating a “Sell” position at this point, expecting the price to fall back toward the middle or lower band.