Bollinger Bands are a technical analysis indicator consisting of an upper, middle, and lower band plotted around a simple moving average to identify overbought and oversold levels. The bands are calculated based on the moving average and standard deviation of prices over a 20 day period, with the middle band being the moving average and the upper and lower bands being 2 standard deviations above and below. Traders use Bollinger Bands to identify potential buy or sell signals when the price hits the lower or upper bands.

1. Bollinger Bands
By-Rajani Darade

2. Bollinger Bands
• Bollinger Bands are one of many indicator
tools used in Visual Analysis.
• Created in the 1980’s by John Bollinger.
• the purpose of the bands is to provide a
definition of high and low prices in the
market.

4. • Upper Band
• Middle Band
• Lower Band

5. SharpCharts Calculation
• Middle Band = 20-day simple moving average
(SMA)
• Upper Band = 20-day SMA + (20-day standard
deviation of price x 2)
• Lower Band = 20-day SMA - (20-day standard
deviation of price x 2)

6. uses
• Pattern recognition
• Price action
• The movement of the market.

7. Buy or Sell?
• If a stock price hits the lower band then many
traders usually buy.
• if prices tend to stick on the middle moving
average band it is a sign to exit the market.
• If a stock price hits the upper bands then
many traders choose sell option.

8. • Bollinger Bands Shows the volatility in the
market
• High Volatility
• Low Volatility