# Bollinger Bands Interpretation

Bollinger Bands are a tool for graphics and technical analysis indicator created by John Bollinger in the early 1980s. They can be compared with price levels relative volatility during a given period. Bollinger Bands determine levels of resistance and support increased downside.

Bollinger Bands consist of a set of three curves on the price value. Mid-range is a measure of the medium-term trend, usually a simple moving average, which is the basis for the upper band and lower band. The interval between the upper and lower bands and the middle band is determined by volatility, typically the standard deviation of the same data used in the average.
The default settings are 20 periods and two standard deviations, but obviously adjustable according to need.

Bollinger Bands Interpretation

Formula:

TP = (High + Low + Close) / 3
Bandwidth = 2 * F * σ (TP)

Description: Bollinger Bands upper band (UB) and lower band (LB) is the default two standard deviations (STDEV) of the n latest price (Pn), above and below the Simple Moving Average (SMA) of the n latest price.

Calculation:
ADM = (P1 + P2 + P3 + P4 + ... + Pn) / n
SMA + UB = STDEV (P1 ... Pn)
LB = SMA - STDEV (P1 ... Pn)

Middle Bollinger Band = 20 period moving average
The upper Bollinger band = top + 2 * standard deviation of 20 periods
Lower Bollinger Band = - 2 * standard deviation of 20 periods

Two additional resources are derived from Bollinger Bands:
Bandwidth or bandwidth: measurement of the width of the bands. It is used to measure the overall configuration squeeze trade based on volatility.
Bandwidth = (upper Bollinger Band - lower Bollinger Band) / Band
Bollinger through

% B: distance from the position of the final price compared to bands. It is generally used to clarify the price trends and build a trading system parameter.
% B = (Current Price - Bollinger Band lower) / (upper Bollinger Band - lower Bollinger Band)