Comment on Indicators (Part 2)

Manish Agarwal commented on 19 Apr 2017, 11:10 AM

Topic: Bollinger Bands (BB) (B.Bands) VS Simple Moving Average (SMA)

Hello, I have become a regular reader of zerodha now..

I was looking at a chart and plotted 20 day MA and a Bollinger Band and I was caught by surprise that they both are based on Moving average but the interpretation to initiate a trade are opposite. BB says, If stock price trade above the MA line (near or above the +2 SD) then we should look for shorting opportunities, but the SMA line says look for buying opportunities in such a situation. So, how to deal with this?

One solution I could think of is:
If a stock is trading above the SMA line but below the upper band of BB we should look for buying till it hits the upper band of BB.

Please suggest if I am thinking correctly.

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