Bollinger Bands

Bollinger Bands are a technical analysis tool used to measure market volatility and identify potential price trends. They consist of three lines: a simple moving average (SMA) in the middle and two standard deviation lines above and below it. These bands expand during high volatility and contract during low volatility. Traders use Bollinger Bands to identify overbought or oversold conditions, potential breakout points, and trend reversals. When prices touch the upper band, it may indicate overbought conditions. Conversely, touching the lower band may suggest oversold conditions. This helps traders make informed decisions on buying or selling assets.