Mr. John Bollinger is a stock trader and analyst who needs little introduction; as well as the very popular Bollinger Bands® which he created. John created the Bollinger Bands® in the 1980s to answer a need for adaptive trading bands to better chart market volatility, rather than the static ones which were being used at the time; and the rest is well-respected history in the world of charting and technical analysis. Since their inception, dozens of profitable trading strategies have been built around Bollinger Bands®, and today we will look at a case study that incorporates the “bands” with three other popular TrendSpider trading indicators on the daily chart for Moderna ($MRNA).
$MRNA (Moderna) Daily Chart
This is a daily chart of Moderna since May of 2020, showing the recent huge move to the upside over the last year. This chart focuses on a few different technical and non-technical tools to get the full picture of what is going on in this chart. Moderna has started to have a sharp pullback after being above the weekly Bollinger Band with a three standard deviation upper band to filter out some of the noise that happens when only using a default two standard deviation band.
- This number shows the weekly Bollinger Bands overlaid on the daily chart using multi-timeframe analysis with a three-standard deviation upper band instead of the default two standard deviation band. The reason for using three standard deviations instead of two is because $MRNA generally will ride up along the upper weekly Bollinger Band and continue to move up after piercing through the two standard deviation upper band. However, using a three standard deviation band, you can see that anytime the daily price pierces above this level over the last year, there is generally a large reversal down to around the 20-week moving average below.
- This number represents the 20-week simple moving average on the daily chart using multi-timeframe analysis and the “sensitivity” feature on TrendSpider. The last two times the price was above the three standard deviation upper weekly Bollinger Band, the price would move down to this area rather quickly but not get all the way to the actual 20-week SMA. For this reason, you can create “sensitivity” around the 20-week SMA which allows you to get an alert any time the price is getting close to the moving average, rather than having to have the price move down exactly to the moving average below.
- This number represents a trendline that is right in-line with the 20-week simple moving average and was found using the “auto-trends” feature on TrendSpider. This allows you to find trendlines that fit your criteria without having to draw the lines, the system does this for you and then you just pick which lines you want to keep on the chart.
- This number represents the recent analyst ratings looking at the buy, sell, and hold ratings over the last year. As you can see, analysts have been very bullish for the entire year of 2021 with only “buy” and “hold” ratings in 2021. You can also see the number of ratings with 14 buy ratings, 13 hold ratings, and only 5 sell ratings over the last 12 months.
One their own, Bollinger Bands® are a very powerful charting tool that has helped thousands of traders over the years attain financial independence trading the markets with a better understanding of volatility. When Bollinger Bands® are used in conjunction with other powerful software charting tools and market information, the synergy is immeasurable. We hope that this case study help to show why trading Bollinger Band® on TrendSpider with its suite of proprietary tools and charting indicators changes the game. Why don’t you give our RSI with Volatility Bands Indicator a try for 7-days free and see what it along with dozens of other automated charting tools can do for you.