JoymistaWhat Are Bollinger Bands?
Bollinger Bands are three lines: a simple moving average (usually 20) with two bands set two standard deviations above and below it.
Explained
The bands widen as volatility rises and narrow as the market calms, and a squeeze often comes before a bigger move. Price touching the upper band does not by itself mean it will fall; in a strong trend price can “walk” along the band.
Example
Example with made-up numbersThe 20 average is 100 and the standard deviation 2.5, so the upper band is 100 + 2 × 2.5 = 105 and the lower band 100 − 5 = 95.
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Related terms
- Moving AverageA moving average is the average closing price over a set number of candles, updated each…
- VolatilityVolatility is how much price swings up and down over a period: the bigger and faster the…
- ATR (Average True Range)ATR measures the average price range per candle over a number of candles (14 by default),…
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Open in JoymistaEducational content, not investment advice.