NEXTSOURCE MATERIALS INC Stock Bollinger Bands: A Comprehensive Guide

Are you looking to delve into the world of technical analysis for NEXTSOURCE MATERIALS INC (NEXT)? If so, you've come to the right place. In this article, we'll be focusing on one of the most popular and effective technical indicators: Bollinger Bands. By understanding how to use Bollinger Bands, you can gain valuable insights into NEXT's stock price movements and make more informed trading decisions.

What are Bollinger Bands?

Bollinger Bands are a type of statistical chart indicator created by John Bollinger in the 1980s. They consist of a middle band being an N-period simple moving average (SMA), two upper bands above and below the middle band, and two lower bands below and above the middle band. The upper and lower bands are typically set at two standard deviations away from the middle band.

How Bollinger Bands Work

The primary purpose of Bollinger Bands is to measure the volatility of a stock's price. When the bands are tight, it indicates low volatility, and when the bands are wide, it indicates high volatility. By analyzing the relationship between the stock price and the Bollinger Bands, traders can identify potential buying and selling opportunities.

Using Bollinger Bands for NEXTSOURCE MATERIALS INC

To apply Bollinger Bands to NEXT's stock, you'll need to follow these steps:

1. Choose the Period: Determine the time frame for your analysis. A common period for Bollinger Bands is 20 days, but you can adjust this based on your trading strategy.

2. Calculate the SMA: Calculate the 20-day SMA of NEXT's stock price.

3. Calculate the Standard Deviation: Calculate the standard deviation of NEXT's stock price over the chosen period.

4. Determine the Upper and Lower Bands: Multiply the standard deviation by 2 and add it to the SMA to get the upper band. Subtract the same value from the SMA to get the lower band.

5. Analyze the Bands: Now that you have your Bollinger Bands, you can start analyzing them.

   • Converging Bands: When the bands converge, it indicates low volatility. This could be a sign of a potential reversal or continuation of the current trend.

   • Expanding Bands: When the bands expand, it indicates high volatility. This could be a sign of a potential trend reversal or continuation.

   • Bands Crossing: When the stock price crosses the upper or lower band, it could indicate a potential buying or selling opportunity.

Case Study: NEXTSOURCE MATERIALS INC

Let's take a look at a hypothetical scenario for NEXTSOURCE MATERIALS INC:

• Current Price: $50
• 20-Day SMA: $48
• Standard Deviation: $2
• Upper Band: $52
• Lower Band: $46

If the stock price moves above the upper band (52), it could indicate an overbought condition, suggesting a potential sell opportunity. Conversely, if the stock price moves below the lower band (46), it could indicate an oversold condition, suggesting a potential buy opportunity.

By using Bollinger Bands, you can gain a better understanding of NEXTSOURCE MATERIALS INC's stock price movements and make more informed trading decisions. Remember, Bollinger Bands are just one tool in your technical analysis toolkit, and it's important to use them in conjunction with other indicators and analysis methods.