How to use Bollinger Bands

When I originally was studying what bollinger bands were all about I read something about how they showed the relative strength of the currency or something along those lines (I'm pretty sure I have the incorrect terminology). Basically the idea behind what I read was that you go short when it's above the upper line and long when it's below the bottom line. Sadly this strategy hasn't worked the times that I've tried it so I did some more searching and I found what I think is a better method of using the bollinger bands.

For those too lazy to read the article I linked to, the idea is that when the bands contract it means that the market is not very volatile, meaning that there is some big moves due to happen shortly.

In their words:

Markets move between low volatility trading range moves to high Volatility trend moves. One of the best ways to see this taking place is with the Bollinger Bands. When a market makes a extremely narrow range move, the Bollinger Bands will noticably narrow together. When the bands narrow down, it shows an extremely low volatiltiy market. A low volatility market forecasts - a high volatility trend move is more than likely - just around the corner. This is a big trading setup and a money making opportunity is at hand. The Bands narrowing together does not forecast the direction that the breakout will be but often times it is fairly clear from classic technical analysis which way the odds favor the breakout to be.

After reading this I looked at the current daily chart for the eur/usd and I think the bollinger bands do contract quite noticeably prior to a big move. As an example (possibly not the best one since the contraction was fairly quick) see around the end of last year.

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