Trading strategies that use price breakouts are amongst the oldest of all technical trading methods and to this day breakouts remain one of the best strategies to build a technical trading system around.
Improved Bollinger Band bounce method can help you filter the trades using making the popular Bollinger Band Bounce trading set up into a really powerful trading strategy. Bollinger Bands are used for identifying both trends as well as volatility.
Developed by John Bollinger, Bollinger Bands is a technical analysis indicator used to measure market volatility. Bollinger bands are constructed based on a 20 day moving average and two outer bands based on 2 standard deviations.
In the 1980s, John Bollinger, a long-time technician of the markets, developed the technique of using a moving average with two trading bands above and below it. Unlike a percentage calculation from a normal moving average, Bollinger bands simply add and subtract a standard deviation calculation.