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Bollinger Bands
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A Bollinger band is an indicator that provides a range within which the price of an asset typically trades.
The width of the band increases and decreases to reflect recent volatility. The closer the bands are to each other – or the ‘narrower’ they are – the lower the perceived volatility of the financial instrument. The wider the bands, the higher the perceived volatility.
Bollinger bands are useful for recognizing when an asset is trading outside of its usual levels, and are used mostly as a method to predict long-term price movements.
When a price continually moves outside the upper parameters of the band, it could be overbought, and when it moves below the lower band, it could be oversold.