01 · Indicator · Bollinger
What are Bollinger Bands?
Developed by John Bollinger in the 1980s, they consist of a 20-period simple moving average and two bands placed two standard deviations above and below it.
Because standard deviation measures price dispersion, the envelope adapts automatically to volatility: narrow in calm markets, wide in turbulent ones.
02 · Indicator · Bollinger
The calculation
Middle band = SMA 20. Upper band = SMA 20 + 2 × 20-period standard deviation. Lower band = SMA 20 − 2 × standard deviation.
Statistically, a large majority of closes stay inside the bands, but markets are not normally distributed: band breaks happen more often than theory suggests, especially in crypto.
03 · Indicator · Bollinger
The squeeze, a move in the making
When the bands tighten sharply, volatility is at its lowest. These compression phases often precede a sudden expansion, up or down.
On GraphTrade, the Bollinger Width indicator measures this compression and the Market DNA panel computes a squeeze score. Combined with a Keltner channel, the squeeze becomes stricter.
04 · Indicator · Bollinger
Walking the band or bouncing?
In a strong trend, price can 'walk' along the upper band: that is not a sell signal. In a range, touches of the outer bands act more as mean-reversion zones.
To tell them apart, check the slope of the middle band, the MACD and the RSI: an RSI diverging at the upper band signals fading momentum.
05 · Indicator · Bollinger
%B and band width
%B shows where price sits inside the envelope: 1 on the upper band, 0 on the lower one. Width expresses the gap between bands as a percentage of the middle band.
Both variants are available in the Volatility group. To compare volatility across the whole market, open the Crypto bubbles or the Heatmap.
◆ Step by step
Get started in 4 steps
- 01
Open a chart
Pick an asset and a timeframe on the Charts page.
- 02
Add Bollinger
In Indicators, Volatility group, click Bollinger.
- 03
Spot the squeeze
Look for areas where the bands clearly tighten.
- 04
Wait for the break
Let price close outside the bands before concluding on a direction.
◆ FAQ
Your questions, clear answers.
01Which settings should I use?
20 periods and 2 standard deviations are standard. Some use 2.5 deviations on very volatile assets.
02Does touching the upper band mean sell?
Not necessarily: in a strong trend price can ride the upper band. The signal depends on context.
03What is a Bollinger squeeze?
A phase where the bands are very tight, a sign of low volatility that often precedes a strong move.
04Bollinger or Keltner?
Keltner uses ATR and an EMA and is more stable. Used together they detect a stricter squeeze.