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Bollinger Bands

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Bollinger Bands are a volatility indicator consisting of a middle band (typically a 20-period SMA) and two outer bands set at two standard deviations above and below. When bands contract (squeeze), it signals low volatility and a potential breakout. When price touches or exceeds the outer bands, the market may be overextended and due for a mean reversion.

This entry is pending full expansion in Tradopedia.