Bollinger Band

Bollinger Bands are made up of three lines:

  1. Simple Moving Average (SMA)
  2. The upper trading band
  3. The lower trading band

This is used as a Lag indicator where it can be assumed that when a candle stick reaches above the upper trading band that it may be considered a sell signal. If a candlestick were to fall below the lower trading band then it may be considered a buy signal.

The trading bands form a support and resistance levels as they are often spaced two standard deviations (95% of the volume traded) off the simply moving average.

Bollinger Band




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