💥 Bollinger Bands
📊 What is the Bollinger Bands indicator?
The Bollinger Bands indicator consists of 3 dynamic lines on the chart:
Middle line: Simple moving average (usually 20 candles)
Upper line: Middle line + 2 standard deviations
Lower line: Middle line - 2 standard deviations
✅ Expands with increased volatility
✅ Contracts during market calm — and this is where the magic begins 👀
🚨 Why is Bollinger Bands important?
Price often stays within the two lines
When the lines contract → strong movement is coming
When the price touches the upper/lower line → expect a rebound or reversal
📌 How to use Bollinger Bands in trading?
1. The Squeeze strategy
When the lines contract like a spring → prepare for a price explosion
Watch for increasing volume + a candle break of one of the lines
👉 Trade in the direction of the break with a tight stop loss
2. Return to the mean
When the price touches the upper line, it often returns to the middle line
And the same goes for the lower line
👉 Excellent for trading in sideways markets
3. Double confirmation
Use Bollinger Bands with RSI or MACD
If the RSI is in overbought + the price touches the upper line → strong reversal signal
⚠️ Common mistakes $BTC
❌ Buying just because the price touched the lower line
❌ Ignoring trading volume — a break without volume = trap
❌ Trading randomly in a volatile market — wait for squeeze or clear trend
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