Bollinger Bands are a popular chart overlay indicator for traders and investors to measure market volatility.
Bollinger Bands indicator applied onto Ethereum TradingView chart!
How to interpret Bollinger Bands on the chart ?
These bands can be found under indicators on charting tools like TradingView and consist of three entities – the upper band, the middle line (which is a 20-day Simple Moving Average by default), and the lower band.
The upper band is located two standard deviations above the middle line, while the lower band is located two standard deviations below the middle line. Traders and investors use Bollinger Bands to interpret market trends and signals.
What is Bollinger Squeeze and how to find it on Chart ?
When applied to a price chart, wider Bollinger Bands indicate higher price volatility, while narrow bands indicate price stability. To look for trends and signals using Bollinger Bands, traders and investors typically watch for a “Bollinger squeeze,” which occurs when the upper and lower bands come closer to the moving average line. This can signal an uptrend, and traders will watch for the price to move above the upper band continuously.
What is Bollinger Bounce ?
When the price reaches the upper band and moves back towards the middle band, it is called a “Bollinger bounce.” Traders will typically look for continuous downward movement of the price below the lower band, indicating a downtrend. The upper and lower bands can also act as support and resistance levels.
It’s important to remember that, like all other indicators and patterns, Bollinger Bands should be used in conjunction with other technical analysis tools for best results. By following these guidelines, traders and investors can make more informed decisions and improve their trading strategies.
What does Bollinger bands represent on the price chart ?
When applied to the price chart, Bollinger bands represent price volatility. Wider bands mean higher price volatility and narrow bands mean price stability.
Looking for trends & signals using Bollinger Bands?
Bollinger Squeeze
On the security price chart, if the upper and lower Bollinger bands come closer to the moving average line, traders/investors usually lookout for price moving higher up above the upper band continuously i.e uptrend. This is the Bollinger squeeze.
Bollinger Bounce!
Practice Bollinger Bands – Beginner
Practice Bollinger Bands – Intermediate
Practice Bollinger Bands – Advanced
Practice Bollinger Bands – Expert
Next Read: Exponential Moving Averages