Bollingers Bands
Developed by John Bollinger in the 1980s, Bollinger Bands are a technical indicator that can be used to measure volatility. Bollinger Bands consist of three curved lines:
σ = Standard Deviation When markets become volatile, the bands widen, during periods of low volatility, they contract. Bollinger Bands are used by traders to provide a relative measure of highness and lowness of the price action. Some traders consider the break-through of the upper/lower band by the price action as a confirmation of the current trend. In the picture below, for example, EUR/USD goes up but prices fail to break the upper Bollinger Band. If the prices break the upper BB, based on the interpretation of Bollinger Bands, it is a signal of strength of the prices and confirmation of the positive trend; if the prices are not able to break the upper BB, it can be a signal that the current trend is running out of steam and prices may pull back. Screenshot of AGEA MetaTrader4![]() Screenshot of AGEA Streamster ![]() |
