A Bollinger Squeeze indicates:

Low volatility with breakout coming. When bands narrow significantly (squeeze), it means volatility is low and a breakout is imminent.

What percentage of price typically stays within Bollinger Bands?

95%. About 95% of price action stays within 2 standard deviations (the bands).

Courses / Trading Fundamentals

Bollinger Bands

Volatility-based trading bands

Bollinger Bands consist of three lines that envelope price:

- Middle Band: 20-period Simple Moving Average - Upper Band: Middle + 2 standard deviations - Lower Band: Middle - 2 standard deviations

Statistically, about 95% of price action stays within the bands. This makes touches of the outer bands significant.

Key concepts: 1. Bollinger Squeeze: Bands narrow significantly, indicating low volatility. A breakout is imminent. 2. Band Walk: In strong trends, price can "walk" along the upper or lower band. 3. W-Bottom: Double bottom pattern within the bands (bullish) 4. M-Top: Double top pattern within the bands (bearish)

Bollinger Bands measure volatility, not direction. Combine with other indicators for directional bias.

Pro tip: A Bollinger Squeeze on the daily chart often precedes major moves.

Pro tip: Use band width indicator to quantify squeeze levels.

Common mistake: Buying when price touches lower band and selling at upper. Better: In trending markets, price can walk along one band — always check the trend first.

Key takeaways

Bands = 20 SMA ± 2 standard deviations
95% of price stays within bands
Squeeze = low volatility, breakout coming
Band walk = strong trend continuation

Quiz

A Bollinger Squeeze indicates: Answer: Low volatility with breakout coming. When bands narrow significantly (squeeze), it means volatility is low and a breakout is imminent.
What percentage of price typically stays within Bollinger Bands? Answer: 95%. About 95% of price action stays within 2 standard deviations (the bands).

Educational content, not financial advice.