Bollinger Band

Bollinger Band was invented and developed by financial analyst and former trader John Bollinger in the early 1980s as a financial indicator.

What is Bollinger Band?

Bollinger Band, named after John Bollinger, who designed it and added it to the dictionary, basically consists of three different bands can be listed as:

• Simple moving average, usually based on a 20-period moving average
• An upper band, usually two standard deviations above the 20-period moving average
• Lower band based on two standard deviations, usually below a 20-period moving average

The Bollinger Band, which consists of three different bands, helps to understand the magnitude of the rise and fall in the market (crypto money market). It also helps to understand the excess of these rises and falls in the price. The correct use of these signals enables investors to buy low and sell high. Thanks to this indicator, investors can more easily determine their buying and selling targets.

How to Use / Read Bollinger Band

Bollinger Band facilitates the estimation of the price volatility of the investment unit to be invested in and facilitates the determination of targets.

If the openness of Bollinger bands increases, it expresses the trend change that has occurred or is about to occur in the market, while the decrease in the opening of these bands shows that the market has been stagnant for a long time and at the same time, there is a possibility of a possible downward or upward price movement.

If the asset in question touches the upper band more than once and falls, it means that the upper band is a strong resistance point. On the contrary, if the value of the asset touches the lower band several times and rises again, then it means a strong support point for the lower band.

If the asset in question exceeds the upper band and reaches a higher value, it means that that asset has risen too much and should not be invested. However, although the asset in question has come to a lower value than the lower band, this seems to be a buying opportunity in the eyes of investors. Because the said asset is interpreted as falling below its value.

To learn and interpret the crypto market better, see also: What are Crypto Whales?