#BOLLINGER #FORNEWCRYPTOUSERS

Many of new crypto traders ignore an important indicator#Bollingerbands

#BB Bollinger Bands are a popular technical analysis tool used in crypto trading (and other financial markets) to identify potential overbought or oversold conditions, as well as volatility.

Here's how they work:

🤑1. Components:

🤔Middle Band: A simple moving average (SMA), usually over 20 periods.

🤔Upper Band: The SMA plus two standard deviations.

🤔Lower Band: The SMA minus two standard deviations.

🤑🤑2. Purpose:

#BB The bands expand when volatility increases and contract when volatility decreases.

🤑Prices tend to bounce within the bands—moving from one band to the other—acting as dynamic support and resistance levels.

🤑🤑🤑What Bollinger Bands Can Indicate:

😵‍💫Price near the upper band: Asset may be overbought (possible sell signal).

😶‍🌫️Price near the lower band: Asset may be oversold (possible buy signal).

😶‍🌫️😶‍🌫️Band squeeze (tightening): Low volatility—often precedes a breakout.

🫥Band breakout: Price breaks above or below bands—can signal a strong trend forming, but not the direction.

🤑🤑🤑In Crypto:

Crypto markets are volatile, so Bollinger Bands are often used to spot potential breakouts or to trade ranges.

Many traders combine them with other indicators like RSI, MACD, or volume to confirm signals.