Bollinger Bands Indicator

What are Bollinger Bands?

Bollinger Bands consist of a middle moving average with upper and lower bands at a defined number of standard deviations. Bands expand during high volatility and contract during low volatility.

Bollinger Bands Example

How the Indicator Works

  • Middle Band: Simple Moving Average (SMA)
  • Upper Band: SMA + (Standard Deviation × Multiplier)
  • Lower Band: SMA − (Standard Deviation × Multiplier)

Interpretation:

  • Squeezes: Narrow bands often precede large moves.
  • Touches: Price touching outer bands indicates momentum but not necessarily reversal.
  • Mean Reversion: Price often reverts to the middle band in ranges.

Available Settings in FutPrint

  • Period: Default 20
  • StdDev Multiplier: Default 2.0
  • Source: Close (configurable)
  • Style: Colors for each band and fill options

Practical Usage and Best Practices

  • Combine with RSI/MACD to filter false signals.
  • Use band width to detect volatility regime shifts.
  • In trends, pullbacks to the middle band can offer entries.

Limitations:

  • In strong trends, multiple touches of outer bands are common; avoid countertrend trades without confirmation.

Using Bollinger Bands in the Platform

  1. Add from Volatility indicators.
  2. Set Period and StdDev to suit the asset’s volatility.
  3. Optionally enable band filling for visual clarity.

See Also