Bollinger Bands: IBM Enters Buying Area but Don’t Pull the Trigger Quite Yet

IBM.N has entered a sensitive area of buying, according to historical Bollinger Bands analysis, but more proof is needed before traders can pull the trigger.

Source: Thomson Reuters Eikon

The spread between the two Bollinger Bands shows that the stock moved higher days after spending time below the 10 level. This being said, the period spent below the 10 level of the difference between the two bands can be quite volatile. For instance, the drop between April 18 and 19 was quite aggressive. Therefore, one should wait for IBM.N to break above 10 before going long.

IBM.N has made a choppy up move since bottoming on June 28 and is currently under pressure following a seeming medium-term bearish doji on July 18th. It is consolidating around the 21-day exponential moving average. A likely trigger to go long, in addition to the stock moving back above the 10 level, would be a break above the 61.8% Fibonacci retracement level at 196.44.

 
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