The Bollinger Bands were created by John Bollinger. It is a technical analysis tool aimed to check the volatility of a stock. It is simply 2 standard deviations above and below the middle line which is a normal moving average. The default MA is at MA20.
This is not a stand alone indicator. I usually use this around support and resistance and RSI to really help in predicting the movement of a stock. The most important event in a Bollinger band is when the bands narrow. We often call that as the ‘squeeze’. That event signifies that a stock is stabilizing. The price range narrows down and usually moves sideways. That squeeze sends you the signal that a potential volatile event is coming and that is a trading opportunity.
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