Definition
Three lines around price: a moving average in the middle, usually 20 periods, and bands above and below it, usually two standard deviations away, that widen when price swings more and narrow when it calms down.
The story
Think of the bands as a gauge of how unusual a move is compared with recent swings. When the bands squeeze tight, the market has been unusually quiet; when price pushes outside a band, the move has been big relative to recent behavior. Touching a band isn't a signal by itself: in a strong trend, price can ride along one band for a while. They're named after John Bollinger, who created them in the 1980s.
Why you'll see it
They're a standard tool on almost every charting platform.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms