What is the Bollinger Bands indicator?
#The Bollinger Bands indicator reveals market trends and volatility and identifies overbought and oversold conditions. It consists of three bands: upper, middle, and lower. Traders use these bands to analyze price action and determine what is happening in the market. John Bollinger developed the indicator in the 1980s and has since been used in various financial markets, including cryptocurrencies.
#BinanceTGEXNY Let's see how to interpret the different constructions of the Bollinger Bands indicator, including how to use the Bollinger Bands indicator to determine support and resistance levels, market volatility, overbought and oversold levels, market trends, and how to trade with them.
1. Support and Resistance
When the price reaches the upper band, traders expect it to form a resistance level, while the lower band acts as a support level. The middle band can also act as a support or resistance level, depending on the market direction. If the price is below the middle band, traders look for resistance at it. However, if the price is above the middle band, it may act as a support level.