Bollinger Band – Price Broke Upper / Lower Band

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Bollinger Band – Price Broke Upper / Lower Band

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Bollinger Bands® are volatility bands placed above and below an SMA (20) (simple moving average using 20 periods). The upper / lower bands are calculated as 2 standard deviations above / below the SMA.   Standard deviation is a measure of volatility, hence, the bands widen when volatility increases or narrow when volatility decreases. Prices should move within the bands 89% of the time, so a breakout is a significant event.

A bullish Bollinger Band Crossover is formed when price crosses the upper band, while a bearish Bollinger Band Crossover is formed when price crosses the lower band.