Many traders uses Bollinger band strategy for forex trading because it is convenient to use but of course with proper use of it. Traders will know if it is oversold if the price is very near or it touches the lower band. Most traders will put a buy position at this point. When the price also gets near or touches the upper band, most traders who uses this indicators will decide to have a sell position during this time.
By definition, according to Investopedia, “is a band plotted two standard deviations away from simple moving averages.” You will see in this indicator that it has 3 bands. The middle, the upper and the lower band. The middle band is the simple moving average with 20 as the default setting of the period. The default settings of the upper and lower band is 2, or is called the deviation.