Understanding Bollinger Bands and Their Significance in Cryptocurrency Trading

Bollinger Bands is a technical tool used in the crypto industry to analyze price volatility and potential trends. It can be used to identify:

• breakouts or trend reversals (if the price breaks through the upper or lower band, it may indicate a shift in market momentum or a new trend forming);
• overbought (price is near the upper band) or oversold conditions (price is near the lower band).

The bands can be created by adding and subtracting a multiple of the standard deviation of price movements from the moving average line. Along with bands, there is also a moving average on the Bollinger Bands that shows price moving average index (usually 20-days long).