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Technical Analysis 1 min read

Bollinger Bands

Also known as: BB, Bollinger

Volatility envelope around a moving average. Bands expand when volatility rises, contract when it falls.

How it works

Upper=SMA20+2σ,Lower=SMA20−2σ\text{Upper} = \mathrm{SMA}_{20} + 2\sigma, \qquad \text{Lower} = \mathrm{SMA}_{20} - 2\sigma
  • Price is inside the bands ~95% of the time in a statistical sense (for normal distributions).
  • Band squeeze — bands tighten → volatility compression → often precedes a strong move.
  • Band walk — price hugs the upper or lower band in a trending market. Strong momentum.

Common mistake

Don't fade every touch of the upper band. In strong trends price rides the band. Combine with RSI or trend context from EMA.