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Bollinger Bands — definition & meaning

A moving average with volatility bands plotted above and below it.

Bollinger Bands wrap a moving average in two bands set a number of standard deviations away, so the bands widen when volatility rises and narrow when it falls.

Price tends to spend most of its time between the bands. A 'squeeze' (very narrow bands) often precedes a big move, and touches of the outer band can flag stretched conditions — but not automatic reversals.

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