Bollinger bands show you when price is  "high" or "low"


Bollinger bands are a technical analysis tool created by John Bollinger. He created the indicator to figure out when to buy and sell stocks based on upper and lower limits of "normal" price movement.

Of course, that won't help you when prices aren't being "normal". But then again, there aren't too many ways (fundamental or technical) that will help when the markets get a mind of their own

Ford stock chart with bollinger bands
Bollinger Bands for Ford Stock Prices
Chart courtesy of Stockcharts.com


What are Bollinger Bands


Bollinger bands are a "chart overlay", because the three "bands" or curves are drawn on top of the price graph (rather than below the graph like trading volume).

The middle "band" is the moving average of price. The upper curve represents the moving average plus two standard deviations. The lower band represents the moving average minus two standard deviations.

The distance between the upper and lower curves gives you an idea of price volatility; the wider the distance, the more volatile the price has been.


Bollinger Band Signals



How to Use Bollinger Band Signals


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