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12/23/2024 4:08:39 PM (GMT+1)

How to Interpret "Bollinger Bands"?

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Bollinger Bands are one of the most popular tools in technical analysis, helping traders assess market volatility and potential entry points. It consists of three lines: the middle (simple moving average) and two outer bands, which are placed at a certain distance from the middle. This distance depends on the standard deviation of prices.

When the price approaches the upper band, it may indicate overbought conditions, while approaching the lower band suggests oversold conditions. During periods of high volatility, the bands widen, and during calm market periods, they narrow. This analysis helps predict potential trend changes and minimize risks when trading.


This material was prepared by Khachatur Davtyan, developed and translated by artificial intelligence.



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