Bollinger Bands Explained (Oracle, Netflix, XRP)

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This is the trading playbook where the
charts do the talking and every session
makes you a better trader.
Hello everyone, Lton here with Verified
Investing and I am here to talk about
something we all have wondered and it's
been one of the most highly requested
topics on the trading playbook. But
before I get any further, I just ask you
guys while you're here to like this
comment, right? Subscribe to the
Verified Investing YouTube channel and
leave a comment down below of what you
want me to cover next. I literally took
this suggestion and decided to cover
this because of your comments in the
videos this past weekend. So, I hope you
guys are good. I'm good. All is well.
But anyways, in today's video, we're
going to be talking about Ballinger
Bands. That is the play
So, I'll go ahead and share my charts,
and you can see that I've gone ahead and
turned on these Ballinger bands. So,
I'll show you exactly how I found them,
right? If you're in Trading View, and
you can do this with any of the
indicators that I go over or choose to
do, you just type in Ballinger
Ballinger bands right here,
and they're already on your chart. And
they apply to pretty much any chart you
can think of. Cryptocurrency,
um, stocks, ETFs, gold,
you name it. Commodities, it all is
valid. The question is, what are
Ballinger bands, right? What are they?
Let me go ahead and tell you what they
are. So,
these are bands based on the 20 SMA or
the 20 simple moving average. Now, we've
gone ahead and previously covered moving
averages, right? So, if you if you want
a little refresher, you can go watch one
of those videos where I talk about
golden crosses, death crosses, and
moving averages in general.
In short, right, it is the average
price, right, of any of these candles,
but based on the previous 20 candles.
And in this case, right, in this case,
we're on the daily chart. It's the price
of any of these things
with the average calculated based on the
last 20 days, right? And that is that
thin blue line here if you're able to
see it. Now, the upper band and lower
bands of these are
the two deviation bands standard
deviations away from this SMA. Right? So
this is two standard deviations below
the average and this is two standard
deviations
above the average. But there's a couple
ways to use this, right? And just simply
taking a look at the chart, right? You
could say,
well, they're pretty good at predicting
levels of support and resistance, right?
You can see that for the most part,
right after every single point where we
went ahead and pierced or traded
alongside
these um Ballinger bands, got to that
second deviation away from the basically
20 SMA, you saw a pullback here. You saw
at least a 2% pullback here. Obviously,
this is earnings, so it's a little
different, but you had 11% pullback.
Even here where you're not seeing a
whole lot where it's chopping around it,
you still had the potential to get a 3%
bounce there. And if you time it
correctly,
you could get in this case a 10%
pop in your direction. But the person
this was named after, Mr. Ballinger
created a different classification
system and used something that you that
identified M tops and W bottoms in order
to find potential trades, right? Great
areas of support and resistance, right?
And as you can see here,
this is just a random chart I pulled up
just of Netflix. We can go to any chart.
Let's say for example I want to go and
take a look at Oracle. I have my bands
on and let's see if we can go ahead and
find anything that that shows us that
hey this is accurate right this can be
useful.
So there are a couple things we need to
follow when we are utilizing
uh the W and M pattern. First of all
what is a W bottom and an M top pattern?
A W bottom is a bullish reversal. I'll
go ahead and write this down for you
because I'm I know I'm saying a lot.
And you can write this down on a piece
of paper or whatever you're following
along on. Pattern indicates
bullish reversal. Now, it has to follow
basically four rules, right? For a W
pattern, right? Number one
verse the first low
has to pierce or touch
pierce
touch
lower band. Okay.
Number two,
it has to bounce back toward the middle
band. Basically this 20 SMA here.
Number three,
the second low
should stay inside the the lower band.
Stay inside
the lower
lower band.
And finally,
and this is confirmation.
confirmation is it's officially
confirmed when price breaks above the
peak of the first bounce.
Okay,
basically this is a W pattern. An M
pattern would basically be the opposite,
right? An M pattern is a bearish
reversal and the first high would need
to pierce or touch that upper band. You
have to have a pullback towards the
middle band and then the second high
needs to stay inside the upper band even
if price goes above it. Which means
price in a W pattern. The second low is
can go lower than the first low as long
as it stays within the band
and there's confirmation when price B
breaks the low of that pullback. So
let's see on this totally random chart
if we can find a W or M pattern. And in
this case, right, I can already see a
couple levels that potentially could be
constituted as a M pattern or W pattern.
So let's start with this one here. And
it's a little smaller, right? A little
smaller, but it's still valid. First you
see this, right?
W pattern
and then you have a nice push up.
Back to our notes, right? What happened?
This first low
pierces or touches and it came well
below this second deviation band, the
lower band of this Ballinger band. Then
you had a bounce up 18%
towards the middle, right towards the
middle.
of the band. Then you had another
pullback and you can see this second low
did not touch the lower band here. And
then when price got above this previous
high right here, which you can see it
struggled at, right? There was plenty of
resistance in and around here. Once it
finally pushed up, boom, look at this
great move up and the stock went ripping
on Oracle there. Right, that's the W
pattern. Now, we want to go ahead and
find the opposite, right? Looking for
kind of an M pattern, right? See if
there are any potentially good M
patterns. And you could, right? And I
don't love to use this, right? You could
use this, but one thing to note,
earnings, right? You see earnings down
here. The stock pushed up off of
earnings, right? But you had a nice push
up, right? Which is going to be the
opposite of that W pattern. You came
down
right towards the middle and then you
made a second push up and then when you
finally broke right finally broke these
pivots that previously served as
resistance or support rather you did
have a decent fall right and the stock
continued to fall right and that's a way
that you could use these Ballinger bands
with a W pattern and an M pattern.
pattern. There are tons and tons of
ways, guys, to use these Ballinger
bands, but I'm just trying to keep it as
simple as possible and just go over this
W and M pattern first. There's ways to
use MACD. There's ways that you can use
volume, um, RSI, tons of different ways
you can lower it. But in general, guys,
you can see that on any chart, right?
Let's let's cover something like XRP for
example that in general yes there are
some cases with extreme moves but within
normal trading
generally whenever you get pierces of
either the upper band or a lower band.
You'll see a bounce off the lower and a
pullback from the upper just using this
20 simple moving average as well as the
two deviation bands or two standard
deviations in either direction. All
right, but with that being said, that's
all I have for you today. Again, my name
is Lenho here with Verified Investing.
Let me know how I did. Um, that was
really complicated and I was doing my
best to kind of make it as simple as
possible for all of you at home. Please
remember to like this video and
subscribe. And guys, guys, guys, the
options conversion secret, a brand new
show with uh Jake and Tabby goes live on
Monday, right? And basically what it is
is a show that tells you everything you
need to know about options. I don't have
much if any experience with options at
all.
So this is going to be a very very
useful show for me. It's on every single
day, every single weekday I should say,
starting at 1 p.m. and it's uh it's
filmed live. So it should be a lot of
fun. Um and I'm looking forward to it.
Okay. Hope you guys have a great rest of
your Saturday and I can't wait to talk
to you tomorrow where I give you three
actionable trade setups using these
Ballinger bands we talked about today.
Have a great day. Take it easy. Bye-bye.
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