Bollinger Bands Calculator
Calculate Upper Band, Middle Band (SMA), and Lower Band from closing prices.
Understanding Bollinger Bands
What are Bollinger Bands?
Bollinger Bands are a volatility indicator created by John Bollinger in the 1980s. They consist of a middle band (20-period SMA), an upper band (SMA + 2 standard deviations), and a lower band (SMA - 2 standard deviations). The bands expand during high volatility and contract during low volatility.
Bollinger Bands Formulas
Mid Band = SMA(20)
Upper Band = SMA(20) + 2 ร ฯ(20)
Key Signals
Bollinger Squeeze
When bands contract tightly, it indicates low volatility. This often precedes a significant breakout. The direction of the breakout determines the new trend.
Walking the Bands
When price repeatedly touches the upper band during an uptrend (or lower band during a downtrend), it indicates a strong trending market. Do not fade these moves.
Frequently Asked Questions
What are Bollinger Bands?
Bollinger Bands consist of a middle band (SMA) and two outer bands set at a specified number of standard deviations away. They expand and contract with volatility.
How to trade with Bollinger Bands?
Price above the upper band may indicate overbought conditions. Price below the lower band may indicate oversold conditions. A squeeze (narrow bands) often precedes a big move.
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What is this tool?
Bollinger Bands calculator computes the volatility-based price channels created by John Bollinger. A Bollinger Band consists of a middle band (20-period SMA), an upper band (SMA + 2 standard deviations), and a lower band (SMA - 2 standard deviations). Price touching the upper band may indicate overbought conditions, while the lower band may indicate oversold.
How to use
- 1
Enter prices
Input a series of closing prices.
- 2
Set parameters
Choose period (default 20) and standard deviations (default 2).
- 3
View bands
See upper band, middle band, and lower band values.
Frequently Asked Questions
What does a Bollinger Band squeeze mean?
A squeeze (bands narrowing) indicates low volatility, which typically precedes a significant price breakout. The tighter the squeeze, the more explosive the subsequent move. Traders watch for volume confirmation when the price breaks out of the bands.
How are Bollinger Bands used?
Upper band means overbought. Lower means oversold. Squeeze signals breakout.
What does it mean when price touches the Bollinger Bands?
When price touches the upper band, it may indicate an overbought condition and potential pullback. When it touches the lower band, it may suggest oversold conditions and potential bounce. However, in strong trends, price can "ride the bands" for extended periods. Use Bollinger Bands with other indicators for confirmation rather than as standalone signals.