Bollinger band is a lagging indicator so it should not be used as the only tool to judge when to enter or exit a trade. You could, however, use it with the price action to make a trade with a higher probability. Thus using it as a confirmation tool but not as the sole deciding factor to enter a trade.
How to trade double bottom formation using Bollinger bands
When you see the Ethereum chart making a double bottom formation, you can trade the pattern using Bollinger bands. Check the Ethereum code review to see how it is done.
The double bottom setup is very common in trades. The pattern is formed when the initial bottom has a lot of volumes and a sharp pullback in price. The pullback closes outside the lower band.This leads to an automatic rally. The high of this rally is the first area of resistance in the process of making abase. This happens before the security starts to move up.
After the rally gets commenced, the price will again try to retest the recent low that is set in the order to test the strength of the buying in the security that is at the bottom. Many technicians who trade using these bands will look for this retest to be inside the lower band. This is an indication that the pressure to go down has subsided and this is causing a shift in the market from the sellers to the buyers. Also, make sure that you see the volume. Make sure that it has started to drop off dramatically.
Trading reversals with Bollinger bands
This is again very effective trading method to trade cryptocurrencies using technical charts. This happens when the asset begins to stay outside the band. You see that the security has gaped up through the upper Bollinger band. You should then wait and see what it is doing. If the asset has gaped up and has closed near the low and it is still away and outside the upper Bollinger band then this can be used as a great indicator to trade it since the asset will correct itself and come towards the middle band.
You can then short the asset and keep your exit either as the upper, middle or the lower band based on what your risk taking capability is.
It is important to note that just touching the upper or the lower band does not suffice. This is not a signal to either buy or sell. Also, make sure to see the volume because it is a great indicator to understand if your trade set up will work.