Bollinger Bands

Bollinger Bands consists of two lines. They are placed on the equal distance to definite amount of usual discrepancies. While the value of standard deflection depends on the price unsteadiness, the lines automatically control their width. The width increases if the market is more volatile and decreases when the market is not so unsteady.

How to interpret price trends using the Bollinger Bands:

The fluctuations of the prices which begin from one of the line's borders, as a rule, reach the other border. The aforesaid feature can be helpful for forecasting price's orienting points;

Uncontrolled changing of prices often happens after the line's shortening, which indicates decreasing of unsteadiness;

If after the rises and falls outside the lines there are rises and falls inside the lines, it's probable that the turn of tendency can occur;

If the prices go outside the borders, the ongoing tendency is expected to be continued.

Bollinger Bands can help to define if ongoing data field values are behaving normally or breaking out in a new direction. For instance, when the closing price of a market moves over its upper Bollinger Band, it usually increases in that direction. Bollinger Bands also helps to find out when trend reversals may happen. A reversal is usually characterized by new peaks or falls outside of the bands followed by another peak or fall inside the bands.

This indicator falls under the Bands category of Chart indicators.