Bollinger Bands have been used by investors to see whether prices have moved off the moving average price value. Many Investors feel that once prices move to one of the standard deviation lines, a buying or selling opportunity is created. Some investors also use Bollinger bands as a confirmation buy or sell signal when it is combined with other indicators. Investigator lets you test these theories.
First, select the time period and enter the number of bars ago value that you want to use for testing.
You then have to enter the number of standard deviations for the Bollinger bands.
You now have two choices which you can choose to use individually or combined.
The first option you can choose is Price Above Upper Band or Price Below Lower Band. If you choose the Price Above Upper Band option, you are asking Investigator to see if the low of the test day is greater than the upper band value. If you choose the Price Below Lower Band option, you are asking Investigator to see if the high of the test day is less than the upper band value. You can also select the Just Crossed? parameter.
You can also optionally select the And Then Price Above/Below Band Within option. If you checked the Price Above Upper Band option, this will test whether the price has first risen above the high band and then dropped below the high band within the given number of bars. More specifically, Investigator takes the current bar, subtracts the specified number of bars, moves up one bar, and starts moving forward in time checking to see if the low of each bar is above the Bollinger Band high value. If the low of a bar is above the high value, Investigator starts moving forward in time to see if the high of a bar is below the high band. If this occurs before the current date, the condition is met.
Note that this can happen at any time within the bars specified. For example, if you specify ten bars and the low of eight bars ago is higher than the Bollinger Band high and the high of two bars ago is lower than the Bollinger Band high, the condition would be met. If you want the value to have just crossed below the Bollinger Band high, select the Just Crossed? parameter. If you select both just crossed values, this indicates that you want the price to have crossed above the Bollinger Band high value exactly the number of bars indicated and then just cross below the Bollinger Band high value on the current date. For example, if you enter ten bars and select both just crossed values, this indicates that the low of the bar nine bars ago must have just crossed above the Bollinger Band high and the high of the current bar must have just crossed below the Bollinger Band high.
The converse of the above two paragraphs applies if you select the Price Below Lower Band option.
The second option you can choose is the Prices Touches High / Low Band option. If you select the Prices Touches High option, Investigator will see how many times the high of a bar is greater than or equal to the high Bollinger Band value over the specified Over Past Bars value. If this value is greater than or equal to the For value, the condition is met. For example, if you enter 6 in the For edit box and 10 in the Over Past edit box, if there are at least 6 bars out of the last 10 bars that have highs that are greater than or equal to the Bollinger Band high value, the condition would be met.
If you select the Prices Touches Low option, Investigator will see how many times the low of a bar is less than or equal to the low Bollinger Band value over the specified Over Past Bars value. If this value is greater than or equal to the For value, the condition is met. For example, if you enter 6 in the For edit box and 10 in the Over Past edit box, if there are at least 6 bars out of the last 10 bars that have lows that are less than or equal to the Bollinger Band low value, the condition would be met.