What are Bollinger Bands?
How this volatility indicator defines normal price ranges and signals breakouts or reversals.
The simple version
Bollinger Bands draw an envelope around a stock's price using three lines: a middle moving average and two outer bands set at a fixed number of standard deviations above and below it.
When price is near the upper band, the stock is relatively expensive compared to its recent range. When near the lower band, it's relatively cheap.
Default settings
- Middle band: 20-day simple moving average (SMA)
- Upper band: Middle + 2 standard deviations
- Lower band: Middle − 2 standard deviations
About 95% of all price action falls within the bands — only genuine extremes poke outside.
Key patterns
- Band squeeze — bands narrow as volatility drops. Often precedes a large breakout in either direction.
- Band walk — price hugs the upper band in a strong uptrend (or lower band in a downtrend). Not automatically a reversal signal.
- Mean reversion — after touching an outer band, price often reverts toward the middle band. Most useful in ranging markets.
How TradeMind AI uses them
Bollinger Bands are overlaid on the dashboard chart. A stock touching the lower band while RSI is below 35 is a setup the AI considers for a BULLISH signal — both indicators agree the stock is in an oversold extreme.
See it in action
Every TradeMind AI signal shows confidence score, entry, stop, target, and R-multiple — all explained with tooltip hints when you hover the term.