Here's a new technique for placing trading bands around the price action of your favorite market. This technique shows how to recognize low-volatility situations and aid in forecasting trend direction.

"The construction of standard error bands is similar to that of Bollinger bands. The difference? Instead of measuring the variance or degree of volatility around the average price using the standard deviation, standard error bands require the use of the standard error of the estimate around a 21-period linear regression line (Figure 1). The middle band is calculated as the ending value of a 21-period linear regression line and adding two standard errors to the ending value of the regression line to form the upper standard error band. To form the lower standard error band, subtract two standard errors from the end value of the linear regression line."

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