What It Is
Bollinger Bands are volatility bands placed above and below a moving average. Developed by John Bollinger in the 1980s, they automatically adjust to market conditions - widening during volatile periods and narrowing during calm periods.
The key insight: volatility is cyclical. Low volatility leads to high volatility, and vice versa. When the bands squeeze tight, a big move is often coming. When they expand wide, the move is often exhausting.
About 95% of price action occurs within the bands (assuming normal distribution). When price touches or exceeds the bands, it's statistically unusual - but that doesn't automatically mean reversal. Context matters.
Trading Strategies
Trading Strategies Squeeze Breakout Strategy Identifying squeeze conditions and positioning for the breakout...
When price rides the band in strong trends...
Using bands to identify overextension and snap-back opportunities...
Squeeze breakouts, band walks, mean reversion, and combining with other indicators.
The squeeze is the setup; the expansion is the trade. When the bands get unusually tight, don't predict direction — wait for the breakout and ride the expansion. Most of your profit comes from the first move out of the squeeze.
Continue through technical indicators
Compare this reference with related structures and readings before applying it to a live chart.