Bollinger Bands
Volatility, BB
- What it shows
Bollinger Bands place bands around a moving average using standard deviation. Band width changes with measured price variation.
- How it is built
The middle line is a simple average. The bands sit a set number of standard deviations above and below it.
- How to use it
- Most price action stays inside the bands.
- A squeeze, with the bands close together, is read as a quiet market that may be followed by a larger move.
- Touching a band is not a signal on its own, in trends price can walk along it.
- History
Developed by John Bollinger in the 1980s.
John Bollinger, 1980s