The Bollinger Bands® study consists of two lines plotted, by default, two standard deviations above and below a moving average of specified type and length. Standard deviation changes as price volatility increases or decreases.
The upper band represents the overbought level while the lower one represents the oversold level: trading might be profitable at either low price or high price relative to the market and prior price action. However, price approaching or bouncing off either band is not necessarily a sign of reversal or breakthrough.
||The price used to calculate the moving average and deviations.|
||The number of bars to shift the study forward or backward. Positive numbers signify a backward displacement.|
||The number of bars used to calculate the moving average and standard deviations.|
||The number of deviations to plot the lower band.|
||The number of deviations to plot the upper band.|
||The type of moving average to be used in calculations: simple, exponential, weighted, Wilder's, or Hull.|
||The moving average.|
||The lower band.|
||The upper band.|
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.
Bollinger Bands® is a registered trademark of John Bollinger.