DYO: PriceFinder - Bollinger Bands

This example does something a little bit different.   A Bollinger Bands study on the chart plots the green lines.  The PriceFinder feature plots the blue lines to show the price where the bar high will cross the upper Bollinger Band and where the bar low will cross the lower Bollinger Band.

An initial reaction is to think the green and the blue lines should be the same.   But not so, says the wise man.  As the price moves towards a Bollinger Band line, the Bollinger Band line will move outward because of increased volatility.   For example, the price is currently at 1206.75.   If the price were to go lower to touch the lower green Bollinger line, the green line will move lower in the process.  The price will catch the lower Bollinger line at a price of 1205.25.  This illustrates the power of PriceFinder to perform the complex math involved in finding the answer.

Line A is the test for Line B to find the price for.  Note that the Line B selection is to find the price that makes the Flag True.  This is a bit different than the prior examples where the PriceFinder selection was finding a price which made the flag state change.

The reason for using the selection of 'PriceFinder makes Flag True' is because once the High is above the Upper Band, there is no price that will undo the High.   Lower prices will not change the High!   Therefore, it is only logical to employ PriceFinder when the High is below the Upper Band to find the higher price that will make the High catch the Upper Band.  Notice that when the High is already above the Upper Band that the PriceFinder does not plot a line.  This is why there are breaks in the PriceFinder study line.  The blue lines break when the Flags being tested are already True.

A template named Bollinger-Bands can be downloaded from the Ensign web site using the Internet Services form.