Bollinger Band Definition - Glossary

Bollinger Band is a volatility indicator using a moving average and two standard deviations to measure market volatility.

Bollinger Band is a technical analysis tool created by John Bollinger. It consists of three lines a middle simple moving average (SMA) and two outer bands. The outer bands are placed at two standard deviations above and below the SMA. This setup helps traders identify market volatility and potential overbought or oversold conditions. When prices approach the upper band, the asset may be overbought. When near the lower band, it may be oversold. Bollinger Bands adjust dynamically to market conditions, making them versatile for identifying trends, reversals, and breakouts in both crypto and fiat markets.