Bollinger Bands: Measuring Price Relative to Volatility

Bollinger Bands typically consist of a moving average and two bands calculated using standard deviations.

When the bands widen, recent price volatility is generally increasing. When they narrow, volatility is generally decreasing.

Some traders use the bands to study potential breakouts or mean-reversion setups.

But touching the upper band doesn't automatically mean sell, and touching the lower band doesn't automatically mean buy.

Strong trends can remain near one band for extended periods.

I use Bollinger Bands to understand volatility, not to assume price must return to the middle.