"IMHO the only good Bollinger is something you drink."
Penny, I agree with that comment. Whilst it is true that share prices generally have to return to the Bollinger bands if they breach them, I see them as of no use in determining which direction a share price is going to move or how much. I think people confuse cause and effect when it comes to the relationship between share price activity and Bollinger bands. The Bollinger bands are a function of past share price activity, not the other way around.
A rising share price that breaches the top Bollinger band can return back below it without falling as the top BB will eventually rise with the moving share price (and vice versa for a falling share price). In the same way if a share price starts fluctuating wildly up and down the Bollinger bands will widen as a result of the share price fluctuations.
BHP Price at posting:
$32.45 Sentiment: None Disclosure: Not Held
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