Technical Indicator: The Bollinger Band
Bollinger Band
* Bollinger Band basically consists of 3 bands – upper, centre and lower.
* Low Volatility = narrow or contracting bollinger band whereas High Volatiity = wide or widening bollinger band.
* Can be use as a gauge to determine volatility of the market.
* Answers the question: how high / low prices are relative to recent historical price actions?
* Centre band = Simple Moving Average sets at 20 days (Typically).
* Upper and lower bands are at 2 stardard deviations away from centre band.
* Basic Premise: Prices should generally fall within 2 std deviation from the centre band.
* Bollinger should be use in conjunction with other indicators.
