Technical
What is Bollinger Bands?
A 20-day moving average flanked by bands two standard deviations above and below β an envelope that breathes with volatility.
Formula
Middle = SMA(20); Upper / Lower = SMA(20) Β± 2 Γ Standard Deviation(20)
How to Interpret
Touches of the outer bands mark statistically unusual moves β mean-reversion setups in ranges, but CONTINUATION signals in strong trends ('riding the band'). A tight squeeze in band width often precedes a large directional move. Band touches are context-dependent, not standalone signals.
Typical Ranges
~95% of closes should fall inside the bands if returns were normal β but markets violate that routinely, so band breaks are more common than the statistics imply. Band width itself doubles as a volatility gauge.
Find Stocks Using This Signal
Screen US and Indian stocks by Bollinger Bands in the Technical Screener.