Standard Error Bands can show trend direction and price volatility around the trend. There are three components to Standard Error Bands:
Standard Error Bands are plotted on the chart of Wal-Mart (WMT) stock below:
Standard Error Bands are used by some traders to determine the strength of trend and potential reversals of trend or consolidation of prices. Standard Error Bands are quite unique in their interpretation, but there are other price-band concepts that are popular such as Bollinger Band, Keltner Channel, and Moving Average Envelope.
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