Bollinger Bands — Complete Reference
Volatility bands plotted at standard deviations above and below a moving average.
What Bollinger Bands measure
Bollinger Bands consist of a middle moving average (typically 20-SMA) and upper/lower bands at 2 standard deviations from that average. The bands widen during high volatility and contract during low volatility — the band shape is the signal.
Reading the bands
Price near upper band = above-average strength. Price near lower band = above-average weakness. Critically, price touching the band is NOT a reversal signal in trending markets. Bollinger Bands are NOT mean-reversion indicators by default.
Bollinger Band squeeze
When the bands contract to a narrow range, volatility is unusually low — often a precursor to a directional breakout. The 'squeeze' setup: identify narrow Bollinger Band conditions, wait for price to break above the upper band (or below lower) with volume, ride the expansion.
Walking the bands
In strong uptrends, price 'walks the upper band' — meaning it touches or hugs the upper band for extended periods. This is bullish continuation, NOT exhaustion. Selling when price touches the upper band in a strong uptrend is one of the most common Bollinger Band mistakes.
Bollinger vs Keltner Channels
Keltner Channels use ATR (Average True Range) instead of standard deviations. Keltner reacts smoother; Bollinger reacts faster. When Bollinger Bands move inside Keltner Channels = strong squeeze, often resolves with a sharp breakout.
The %B and Bandwidth tools
%B shows where price sits within the bands (0 = lower band, 1 = upper band). Bandwidth shows how wide the bands are. Both can be plotted as separate oscillators for quantitative analysis.
Where Bollinger Bands shine
Volatility expansion plays. Squeeze breakouts. Quick visual of current volatility regime. NOT for picking reversals in trending markets.
Bollinger Bands and SultraxAI
SultraxAI uses volatility bands as part of its regime classification (high-vol vs low-vol regimes get different signal weights). See it in action →