bollinger bands

Bollinger Bands are a technical analysis tool that consists of a set of three lines plotted in relation to a security’s price. The middle line is a moving average (typically a 20-period simple moving average), and the upper and lower bands are calculated by adding and subtracting a specified number of standard deviations (commonly two) from the moving average. These bands expand and contract based on market volatility, helping traders identify potential overbought or oversold conditions and gauge the relative high or low of a price in comparison to previous trades.