Moving Average Bands
By Samantha Baltodano
What is the Moving Average Bands Study?
Moving Average Bands are a technical indicator that plots four lines: two different moving averages and one upper and lower band based on their standard deviation.
This study can be used with any moving average: simple, exponential, Wilder’s, Hull, weighted.
How do you use moving average bands?
The Moving Average Bands indicator is calculated by:
- Two moving averages of the same type are calculated. The slower moving average is used as a middle band.
- The standard deviation of the faster moving average from the slower one is calculated. This is considered a measure of volatility.
- By default, upper and lower bands are plotted one standard deviation above and below the middle band.
Four lines are calculated: the upper band, the lower band, the middle band (same as the slower average), and the fast average.
The general trend of the bands can be used for confirmation of the price trend.
The upper and lower bands can be used as dynamic overbought and oversold levels.
The faster moving average’s crossovers with the upper and lower bands can help identify entry and exit points.
Moving Average Bands is just one of many studies that Archaide automates. For a full list of strategies and studies available click here.
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