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Bollinger Bands are volatility indicators and are used to identify extreme highs or lows in relation to the current price.Bollinger Bands are based on a set number of standard deviations from the moving average. It essentially tries to indicate support and resistance levels or bands of expected trading. As with the moving average, here too the trader can pick and adjust the moving average on which to base his Bollinger Bands and the number of standard deviations to use. The trader can adjust these over time to suit his individual trading style. The default used is usually a 20-day moving average and two standard deviations from the moving average. A break above or below the Bollinger Bands may show an exit point or a reversal.
Bollinger Bands
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