bollinger bands indicator

The Bollinger Bands indicator, created by John Bollinger, is a popular tool in technical analysis. It consists of a simple moving average (SMA) surrounded by upper and lower bands that are typically two standard deviations away from the SMA. These bands dynamically adjust to volatility: they widen during periods of high volatility and narrow during calmer market conditions. Traders often use Bollinger Bands to identify potential trend reversals, overbought or oversold conditions, and volatility breakouts. When prices touch or penetrate the outer bands, it may signal potential entry or exit points. Additionally, the width between the bands can indicate the intensity of market movements. Understanding how to interpret and utilize Bollinger Bands can provide valuable insights into market dynamics and improve trading decisions.