Bollinger Bands

Also called: BB, BBands

A volatility envelope — a moving average plus/minus N standard deviations of recent price.

Bollinger Bands (John Bollinger, 1980s) plot a centre line (typically 20-SMA) with two outer bands at ±2 standard deviations. The bands expand when volatility rises and contract when it falls.

Two famous patterns: ‘Bollinger squeeze’ (very tight bands → expansion coming) and ‘walking the band’ (price hugging the upper/lower band in a strong trend).

EUR/USD's bands tighten to their narrowest in 90 days — expect a directional move soon, but the bands don't predict which way.

Middle = SMA(20)
Upper = Middle + 2σ
Lower = Middle − 2σ

Bollinger Bands

Definition

Example

Formula