What are Bollinger Bands?

Bollinger Bands wrap a moving average with an upper and lower band set a number of standard deviations away. The bands widen when volatility rises and narrow when it falls.

The squeeze

When the bands contract into a narrow squeeze, the market is quiet and coiled. A squeeze often precedes a sharp expansion, though it does not tell you which direction the break will take.

Riding the band

In a strong trend, price can hug the upper or lower band for an extended run. Touching a band is not by itself a reversal signal; it shows price is at the edge of its recent range.

Mean reversion

In calmer, range-bound markets, price tends to drift back toward the middle band after tagging an outer band. Context decides whether to expect continuation or reversion.

Set an alert

Set a Bollinger alert to be notified when price breaks the upper or lower band on an instrument you follow. This is available on the free plan.