← Glossary
Bollinger Bands
A band drawn above and below a moving average, sized by recent price volatility — price hugging the outer bands suggests an extended move, not necessarily a reversal.
Bollinger Bands consist of a middle line (typically a 20-day moving average) and an upper/lower band set a fixed number of standard deviations away. When the bands widen, volatility is rising; when they narrow, volatility is compressing.
Price touching the upper band isn't automatically a sell signal, nor the lower band a buy signal — in a strong trend, price can ride along a band for an extended period.