John Bollinger, a financial analyst, and trader created the Bollinger Bands in the 1980s. Many traders and chartists have used the BB as a technical analysis indicator since then.
The Bollinger Bands are essentially a tool for measuring market oscillations. As a result, the Bollinger Band indicator can be used to pinpoint whether a market is experiencing high or low volatility. They can also be used to detect probable overbought or oversold market circumstances.
Two sidelong bands and a central line make up the BB indication. These three parts show how prices tend to move closer to an average value, which is represented by the middle band. When market volatility is high, the upper and lower bands expand, and when market volatility is low, they decrease.
An overbought condition occurs when the price of an asset goes from below the middle line to above the top band. If the price of an asset exceeds the bottom range, it could indicate oversold circumstances. The upper and lower bands may also indicate probable levels of support and resistance, where the price is likely to bounce.
Bollinger Bands are a popular Technical Analysis indicator, particularly in traditional financial markets. They are, nevertheless, employed by crypto traders.
To reduce total risks, these should be utilized in conjunction with other Technical Analysis tools and indicators, not as a stand-alone tool.
