Bollinger Bands

Bollinger Bands

Bollinger Bands are a way to compare a security’s volatility and price levels over a period of time. They are essentially volatility bands placed above and below a moving average. Volatility is based on the standard deviation.

Technically, prices are relatively high when above the upper band and relatively low when below the lower band. However, note that you should combine Bollinger Bands with basic trend analysis and other indicators for confirmation.