What is the Bollinger Band?

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2020-02-08 20:10

Bollinger Bands has a middle line with two outer channel lines/band. The middle line is a simple moving average that is usually set at 20 days.  The outer lines are usually set 2 standard deviations above and below the middle band.

The simple and quick way to read the Bollinger Band is look for areas where it squeezes into a small and tight channel, this is a consolidation phase and indicates a break out is likley about to happen.  The size of the breakout is not determined by the Bollinger band. Once the break out has occured, any price action that goes up or down so fast that it is outside the outer lines of the bollinger band is an indication that the price has moved too far too fast and is likely to take a breather and fall back into the boundries of the bollinger band. Take a look at the capture below where we outline consolidation and an oversold/overbought break out.

You can use Bollinger Bands with crypto such as Bitcoin, Lightcoin, XRP, DASH, etc. The same as traditional stock markets, this indicator is not enough on its own and should be used in combination with other indicators.

Bitcoin with bollinger bands


Bitcoin Bollinger Bands

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