📊 Bollinger Bands Indicator
The Bollinger Bands indicator is one of the most famous and widely used technical indicators in the crypto market, as it helps traders understand the strength of volatility and predict price explosions.
🔹 How does the indicator work?
It consists of 3 lines:
1. The middle line: usually a Simple Moving Average (SMA).
2. The upper line: represents a moving resistance area.
3. The lower line: represents a moving support area.
🔹 How do we read the Bollinger Bands?
If the price approaches the upper line → the market may be in a state of overbought.
If the price approaches the lower line → the market may be in a state of oversold.
If the bandwidth narrows (the lines are close to each other) → a price explosion is likely to happen soon.
If the bands widen → the market is in a strong volatility state.
✅ Tips for beginners:
Do not rely solely on the Bollinger Bands; use it with other indicators like RSI or MACD.
Its best uses are during periods of volatility, not during very strong trends.
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