Using Bollinger Bands with supply and demand levels
Lately I’ve been using Bollinger Bands to confirm my supply/demand trades and found them to be pretty efficient. Bollinger bands give you, in my opinion, both the power of an oscillator and that of a moving average. They let you gauge the trend and also tell you when a market is overbought or oversold.
A market is trending up (bullish) if price is moving between the upper and the median bands.
A market is trending down (bearish) if price is moving between the median and the lower bands.
A market is overbought if price is piercing the upper band.
A market is oversold if price is piercing the lower band.
These clues, however, are not entry signals. They are only used to confirm the strength of S/R zones. Let’s take a look at one of the three trades I just made a few minutes ago, which are currently at +75 pips, but should bring me 160 pips if they go well 
Long GBPUSD
Reasons for going long were:
- price was rejected from 1.6517, which is near 1.65 (a good demand level and also a round number);
- price was rejected from the middle band, while it was trending up (trading between the upper and the middle band);
- inverted bullish hammer showing reversal signs;
I find that taking trades like these (with good confirmation) adds up to your win ratio pretty good.
Tags: Bollinger bands, demand, forex, resistance, supply, support, trading
