Rochester, NY 12/3/2009 4:15:59 AM
News / Business

Penny Stock Professor on How Bollinger Bands Help to Predict Stock Prices

Utilizing technical indicators can be a powerful tool when determining the likelihood and chance a stock has to grow. Tools often utilized when attempting to predict the movement in stocks include Bollinger bands, moving averages, convergence divergence, stochastic, and relative strength indicators. These tools are utilized as indicators to predict the future trading of securities. There are also many other tools in which you can utilize to gain viable information on publicly traded companies.

 

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A commonly used technique, is a Bollinger band. Bollinger bands are plotted using two lines, one above and one below, the price chart of the stock. When a stock makes rapid movements, which are quite common in the Pink Sheets and OTCBB marketplaces, the Bollinger bands will move further away from the stock's price chart. With rapid motion in price movements, the Bollinger bands will be closer to the stock's price chart.

 

Two common techniques that are often use to predict break out stocks in Small Cap markets are the Bollinger Bounce and Bollinger Squeeze. The Bollinger bands can be used to predict when the trading price of the stock will bounce off either the top or bottom line and then return back to its common path.

 

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