The MSDBs and Narrowing Volatility

There will be times, regardless of whether the market is moving sideways or trending, when volatility will decrease and the market will get narrower. In such circumstances the bands are effective only in the earlier part of their plot as they expand from the first bar and catch the initial highs and lows; thereafter, as price narrows, the curves will have little further effect. Figure 15.5 is a 2m chart of the DAX September 2010 futures with a large pennant-shaped formation. The bands in the early part of the plot do the job expected; however, after the lower arrow the price range narrows considerably, and the lower bands are ineffective. After the upper arrow the price range also keeps narrowing, and the only ...

Get MIDAS Technical Analysis: A VWAP Approach to Trading and Investing in Today's Markets now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.