Bollinger Bands

Bollinger Bands are similar to MA Envelopes. In MA Envelopes moving average is shifted by a fixed percentage whereas in Bollinger bands the moving average is shifted by standard deviation.

     Bollinger Bands are interpreted in similar to MA Envelopes. Since Bollinger Bands are shifted using standard deviation, the bands tend to widen during more price volatility and tend to narrow during less volatile periods.

In the above picture the Bollinger Bands are drawn by shifting the 20 days moving average by the amount of 2 standard deviations.

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