Trend Indicator: Bollinger Bands

Bollinger Bands represent another useful tool for determining trends. It is easy to understand that if prices are biased, they do not move in a straight line, but they deviate sideways. Bollinger bands are made to track the price deviation of the Moving Average for 20 periods. This technical indicator divides the price action into three separate areas. If prices are between the middle band and the top band, they are in the buying zone. If a coin is stuck between the middle and the lower band, prices are in the selling area. If prices are wandering in the middle area, they are in the “no man’s land”. It means that they are trying to find the direction of the trend. There is also another very interesting quirk in the Bollinger bands. Sometimes we can see recurring grips on the chart. As bands approach each other, they tell us that we are trading in the non-volatile market and that a volatile period is approaching the horizon. In contrast, if the bands move away, it means that the period of volatility ends and it is better to leave a position. 


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