Bollinger Bands

A tool for technical analysis which compares an instrument’s moving average with its volatility.

Bollinger Bands are designed to show whether an instrument’s price is high or low relative to its average. They are plotted by bracketing a stock’s performance with a band two standard deviations above the simple moving average and a band two standard deviations below.

When markets are volatile the bands are wide, when they’re more stable the bands contract.