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Bollinger Bands


Bollinger Bands

Created by John Bollinger, this envelope uses standard deviations to plot the lines above ( Dev. Up) and below ( Dev. Down) using a moving average ( Length).
More volatility will create more space between the bands.

-When prices move outside the bands, it is assumed the trend will continue.
-A move that originates at one band tends to go to the other band.
-Sharp price changes tend to occur after the bands get closer, as the market has less volatility.
-Bottoms and tops made outside the bands followed by bottoms and tops made inside the bands signal  reversals in trend.


 

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