Bollinger Bands
A volatility indicator consisting of a moving average and two bands set at standard deviations above and below, showing when price is statistically extreme.
Explained Simply
Bollinger Bands (typically 20-day SMA with 2 standard deviation bands) expand in high volatility and contract in low volatility. Price touching the upper band suggests the stock is overbought; the lower band suggests oversold. The "Bollinger squeeze" — when bands narrow significantly — often precedes a large breakout. About 95% of price action stays within the bands, making touches of the outer bands statistically significant.
How Tradewink Uses Bollinger Bands
Bollinger Band touches are a key input for mean reversion signals — a lower band touch combined with RSI below 30 is a high-probability bounce setup. Bollinger squeezes are also used to identify breakout candidates: the AI watches for squeezes followed by volume expansion, then generates breakout signals.
Related Terms
See Bollinger Bands in action
Tradewink uses bollinger bands as part of its AI trading signal pipeline. Start getting signals that use this concept to find real opportunities.