Use Bollinger Bands to see where price is moving,
and MACD to see how strong that move really is.
Together:
Price below lower band + MACD dropping → strong downtrend
Price below lower band + MACD rising → possible reversal
Narrow bands + MACD flat → big move coming
soon
Step 1: Identify Setup Zone (Before Entry)
Use Bollinger Bands + MACD to spot the setup before acting.
Bands narrow = low volatility
→ Get ready. Market is storing energy.
Price dips below lower band
→ Possible oversold area — don’t buy yet, just observe.
MACD starts curving upward or crossing above signal line
→ Momentum turning bullish = potential entry zone.
📍Draw a horizontal line (support line) at the lowest wick or close of the dip under the lower band.
That marks the bottom zone — your risk line (stop-loss zone).
🧭 Example Flow
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Bands narrow → watch closely
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Price dips below lower band → don’t buy yet
-
MACD starts rising → draw potential entry line above middle band
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Price moves above middle band → enter long
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Stop-loss = below previous low
-
Take-profit = near upper band or when MACD flattens
the price goes below the second Bollinger line (the lower band), that means it has dropped more than two standard deviations below its recent average price.
ReplyDeleteIf the Bollinger Bands are narrow while the price is hugging or slightly below the lower band, the meaning changes quite a bit from when the bands are wide.
ReplyDeleteThe narrow bands mean price hasn’t been moving much; volatility is compressed.
ReplyDeleteWhen price touches or dips under the lower band in a squeeze, it doesn’t always mean a strong downtrend — it might be a fake-out before a big move either up or down.
ReplyDeleteThink of it as the “calm before the storm.”
Bands are narrow → price falls slightly under the lower band → no strong volume → soon after, price may reverse upward quickly or break downward sharply.
ReplyDeleteNarrow Bands
ReplyDeletePrice touches or dips under lower band
Volatility squeeze → breakout coming
Watch closely — wait for breakout direction
🔹 What to Watch Next
ReplyDeleteIf you see that:
The bands are very close together (narrow), and
The price is slightly below the lower band,
Then you should:
Wait for confirmation — a strong candle breaking either up or down.
Watch volume — a breakout with high volume is more trustworthy.
Check RSI — if it’s oversold (<30), the breakout might be upward soon.
Narrow bands = quiet market building energy.
ReplyDeleteA small move below the lower band doesn’t mean trend — it’s a warning that a big move is coming soon.
MACD line crosses above signal line Bullish signal (momentum turning up)
ReplyDeleteMACD line crosses below signal line Bearish signal (momentum turning down)
MACD histogram shrinking while price still dropping Sellers losing strength → possible reversal
MACD far below zero line Market deeply oversold → risk of rebound soon
ou said:
ReplyDelete“The bands are now narrow, and price is slightly under the lower band.”
So if we add MACD:
🔸 If MACD lines are flat and close together → market is just consolidating (no real trend yet).
🔸 If MACD turns down below the signal line → a small bearish move might start, but be cautious (can still reverse quickly).
🔸 If MACD starts to curl upward while the price is under the lower band → bullish divergence, meaning a potential bounce soon.
Use Bollinger Bands to see where price is moving,
ReplyDeleteand MACD to see how strong that move really is.