Bollinger Bands – FX Replay User Guide

Bollinger Bands are a volatility-based overlay that helps you gauge market conditions, spot overbought/oversold zones, and plan breakout trades. On FX Replay, they’re perfect for swing setups, mean-reversion plays, and breakout timing.

How They Work

• Middle Band: Simple Moving Average (SMA), typically 20 periods
• Upper Band: SMA + 2 × Standard Deviation
• Lower Band: SMA – 2 × Standard Deviation

The bands expand and contract with price volatility.

How to Read Them on FX Replay

Volatility Gauge

• Wider Bands → Higher volatility
• Narrow Bands (“Squeeze”) → Low volatility, breakout brewing

Overbought / Oversold Zones

• Price near Upper Band → Potential overbought condition
• Price near Lower Band → Potential oversold condition

Trend Direction

• Rising SMA → Uptrend bias
• Falling SMA → Downtrend bias

Actionable Use Cases

• Swing Trading: Buy near Lower Band, target Upper Band — works best in range-bound markets (consider 1.5 SD bands for tighter control).
• Trend Following: In strong trends, enter pullbacks to the Lower Band (uptrend) or Upper Band (downtrend). Avoid fading the trend.
• Bollinger Squeeze Breakouts:
  • Look for tight band contraction → signals breakout potential.
  • Entry Triggers:
    • Long: Break above Upper Band during a squeeze
    • Short: Break below Lower Band during a squeeze*
• Combine With Other Tools: Add volume or momentum indicators (e.g., RSI, MACD) to confirm breakout strength, and align band reactions with key support/resistance levels.

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