Technical Indicators— Summary

[Practice Problems] Bollinger Bands are constructed by plotting:

A.    a MACD line and a signal line.

B.    a moving-average line with an uptrend line above and downtrend line below.

C.    a moving-average line with upper and lower lines that are at a set number of standard deviations apart.

[Solutions] C

Bollinger Bands consist of a moving average and a higher line representing the moving average plus a set number of standard deviations from average price (for the same number of periods as used to calculate the moving average) and a lower line that is a moving average minus the same number of standard deviations.

[Practice Problems] Which of the following is not a momentum oscillator?

A.     MACD.

B.     Stochastic oscillator.

C.     Bollinger Bands.

[Solutions] C

Bollinger Bands are price-based indicators, not momentum oscillators, which are constructed so that they oscillate between a high and a low or around 0 or 100.