Bollinger BandsBollinger Bands (BB)
A 20-period SMA with bands at ±2 standard deviations. Statistically 95% of price action stays inside.
Bollinger Bands plot a 20-period SMA (middle band) with upper and lower bands at ±2 standard deviations. Statistically, 95% of price action stays inside the bands — a tag of either extreme is a 2σ outlier event.
The Bollinger Bands × RSI strategy is the canonical mean-reversion trade: price tags the lower band + RSI <30 + bullish reversal candle = long entry. TP at the middle band, SL beyond the wick. Avoid in strong trends — touches of the upper band in trends are continuation, not reversals.
Strategies that use Bollinger Bands
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