Valuation Bands - Customized Bollinger Bands

Valuation Bands are supposed to be used for taking INVESTMENT decisions. Hence best time frames to use these bands are Daily & Weekly.

These bands are an attempt to represent a stock's valuation in terms of its pricing. Obviously, there is no relation between actual valuation determined through Fundamental Analysis.

The bands have been created by modifying Bollinger band settings. There are 3 bands Over-Valuation Band, Average Valuation Band & Under Valuation Band.

OVER VALUATION BAND

- Do not create fresh positions near or above this band
- If the price is trading above the band; hold onto your investment unless there is closing below this band.
- If the price closes below this band; wait for a reversal sign to create a fresh entry.


AVERAGE VALUATION BAND

- Create a new or keep adding more to your existing positions as the price approaches this band.
- It is recommended to exit if this band is broken & wait for fresh entry.

UNDER VALUATION BAND

- Look for a fresh investment opportunity after there is closing above this band
- Do not create fresh positions unless there are clear reversal signs.

You can use this indicator along with REKAB & RECAT to confirm entry points.