Good cop, bad cop

...or should I say, "good trade, bad trade". I went long when BBands were flat and prices breached them (BBands are purple in this chart) at the left side of this chart. I got out for 3 tick loss when prices rebounded back within the bands.

I should have shorted at that point. In the Cahen book mentioned later in this post, Cahen sites a statistic that when the bands are breached, but prices rebound back within them, there is an 80+% probability prices will move to touch the opposite band, which they did in this case.

I made money on the second long; I went long went prices hit the previous high as the BBands widened. These phenomenon are explained in great detail in Philippe Cahen's book, "Analyse Technique et Volatilite", which is still only published in French. He also has an older book published in English as well, but the French one is updated and more accurate. The major difference is the addition by Cahen of a 7-period and a 21-period SMA, resulting in fewer bad trades.

Cahen teaches to pay close attention to the Bollinger Band on the opposite side from where the prices are. In this case, the more important band is the lower one, not the upper one. Note that a precisely the point that prices reversed, so did the opposite Bollinger Band.