Technical Analysis: Bollinger Bands

Bollinger bands are plotted above and below a moving average, a specified number of standard deviations away. We discuss the basics behind Bollinger bands and the interpretations and signals that can be drawn from them. We look at their usefulness in identifying take-profit levels, and also how they can be used in mean reverting and break out strategies. We then look at other similar banding techniques such as average true range and STARC bands.