1.Price is always a reflection of the latest market information and news. Price is like a mirror that demonstrates the impacts of news on price movements in real time.
2.Identifiable patterns and trends can still be found even in a seemingly random price action. Prices are susceptible to past trends and may continue to move in this direction.
3.Influenced by market participants’ psychology and emotions, history tends to repeat itself. Therefore, prices move in one direction periodically and are less likely to reverse abruptly.
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A Bollinger Band (BB) is also a popular technical indicator. It draws the possible price range on a candlestick chart combining a moving average and standard deviations. Specifically, it puts the SMA of the past prices of n days in the center, calculates the standard deviation of the prices of n days, and then extends m*standard deviations up and down as the boundary. The feature of Bollinger Bands is that when the price oscillates back and forth along the moving average, the probability of occurrence of different prices can be calculated by statistical methods. Under the normal distribution, about 95% of the values will fall within the range of 2 times the standard deviation from the central value. When the price is close to the upper or lower edge of the Bollinger Band, it usually indicates a large deviation from the mean, which may be a potential buying or selling opportunity.**
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