Bollinger Bands Calculator
Category: Technical AnalysisCalculate Bollinger Bands to identify volatility, potential reversals, and price targets using standard deviation-based bands
Price Data Input
Bollinger Bands Parameters
Understanding Bollinger Bands
Bollinger Bands are a versatile technical analysis tool developed by John Bollinger in the 1980s. They consist of a middle band (typically a 20-period moving average) with upper and lower bands placed at standard deviation levels above and below the middle band.
How Bollinger Bands Work
Bollinger Bands consist of three components:
Where n is typically 20 periods and k is usually 2 standard deviations.
The bands expand and contract based on price volatility, providing dynamic support and resistance levels.
Additional Bollinger Band Indicators
- Bandwidth: Measures the width of the bands relative to the middle band. Calculated as: (Upper Band - Lower Band) / Middle Band
- %B (Percent B): Shows where price is in relation to the bands on a scale of 0 to 1, where:
- %B = 1.0: Price at upper band
- %B = 0.5: Price at middle band
- %B = 0.0: Price at lower band
- BandWidth: Can identify "squeezes" (periods of low volatility) that often precede significant price movements
Bollinger Bands Trading Strategies
Band Touches and Bounces
One of the most common strategies is to look for price touches or tests of the bands followed by reversal moves:
Bullish Signal: Price touches or slightly penetrates the lower band and then begins to move higher
Bearish Signal: Price touches or slightly penetrates the upper band and then begins to move lower
This strategy works best in ranging markets rather than strong trends.
Bollinger Band Squeeze
The "squeeze" occurs when volatility falls to a low level and the bands narrow dramatically:
1. Identify periods where the bands narrow significantly (low BandWidth)
2. Watch for the first significant move out of the narrow bands
3. Trade in the direction of the breakout
This strategy aims to capture the beginning of new trends following periods of consolidation.
Riding the Bands
In strong trends, price can "walk the band" by moving consistently along one band:
Uptrend: Price rides the upper band, with pullbacks typically finding support at the middle band
Downtrend: Price rides the lower band, with rallies typically finding resistance at the middle band
Exit when price crosses the middle band in the opposite direction of the trend.
Bollinger Band Divergence
Look for divergence between price movements and %B or bandwidth:
Bullish Divergence: Price makes a lower low, but %B makes a higher low
Bearish Divergence: Price makes a higher high, but %B makes a lower high
Divergences can signal potential reversals, especially when combined with other indicators or chart patterns.
Tips for Using Bollinger Bands Effectively
- Don't use bands in isolation - Combine them with other indicators like RSI, MACD, or volume to confirm signals
- Remember "bands are not boundaries" - Price can and does exceed the bands regularly, especially in trending markets
- Watch for "W" bottoms and "M" tops - These patterns (double bottoms/tops with the second bottom/top holding above/below the lower/upper band) can be powerful reversal signals
- Consider multiple timeframes - Using Bollinger Bands across different timeframes can provide more comprehensive analysis
- Adjust parameters for different markets - While 20-period, 2 standard deviation bands are standard, you may need to adjust these parameters for different markets or timeframes
- Pay attention to band width - Narrowing bands (decreasing volatility) often precede significant price moves, while widening bands indicate increasing volatility
Volatility Clues from Your Bollinger Bands Output
Your Bollinger Bands analysis has now given you a set of dynamic price boundaries, along with volatility metrics like bandwidth and %B. These aren’t just visual overlays—they offer real insight into market momentum, breakout potential, and the strength of current trends.
In this case, you’re seeing:
- Price: Near the middle of the bands
- %B: Around 56.3%, suggesting neutrality
- Band Width: 4.1%, reflecting normal volatility
- Trend: Bullish, with moderate strength
- Volatility: Increasing, as bands expand
- Signal: Buy, based on a bounce off the lower band
This combination tells us the market is gaining energy, but hasn’t yet hit an extreme. If you’re watching for moves with conviction, this setup deserves attention—especially if confirmed by other indicators.
Signals to Watch in Your Bollinger Bands Output
Based on the calculator's results, here are a few key signals and what they might mean for your trading strategy:
- Bounce from the lower band: This triggered the current Buy signal. Such bounces can act like springboards in ranging markets.
- Bands expanding: Volatility is increasing, which often precedes larger price swings. Directional bias should be supported by trend or volume indicators.
- Middle band support: With price near the center, the next push could offer clues. If price crosses above the middle band and holds, it strengthens the bullish case.
If you're seeing price consolidate while bands expand, you may be in the early stages of a trend. These setups can reward patient traders who wait for confirmation.
Volatility, Bandwidth, and What They Mean Right Now
Bandwidth sits around 4.1%, which suggests a moderate level of volatility—neither excessively compressed nor aggressively wide. Here’s what to take away from that:
- Not a squeeze: A true Bollinger “squeeze” typically sees bandwidth near or below 2%. We're above that, indicating price isn’t coiling tightly just yet.
- Expansion in progress: With the latest bandwidth higher than previous values and climbing, the market is entering a more active phase. This can precede sustained directional moves.
- Trend confirmation matters: In these situations, pairing Bollinger Bands with momentum indicators (like RSI or MACD) can help confirm whether you’re catching a new trend or a fake-out.
Don’t assume expanding bands guarantee strong follow-through—but they do hint that the range is opening up.
Risks to Keep in Mind
Bollinger Bands can produce false signals in certain environments. Based on your output, consider the following:
- Middle-of-the-band price location: Signals in this zone can be choppy, as the market hasn’t committed to direction.
- Buy signal after lower band touch: This works better in range-bound conditions than during strong downtrends. Watch for follow-through.
- Moderate trend strength: A trend with only moderate conviction may stall. Use caution with large positions unless confirmed by price action.
Always assess the broader context—news events, macro drivers, and other technical levels all play a role in how reliable any signal will be.
Practical Tips Based on This Output
If you’re thinking about trading this setup, here are a few practical steps to consider:
- Confirm trend strength: Use tools like moving average direction or momentum indicators to validate the bullish bias.
- Watch %B closely: If it begins to rise above 70%, it could signal strong upside momentum.
- Monitor band shape: Continued expansion supports volatility breakouts. If bands flatten, reassess quickly.
- Set stop-loss outside bands: For Buy positions, placing stops just below the lower band may reduce whipsaw risk while respecting volatility levels.
Next Steps with Your Bollinger Bands Analysis
Your Bollinger Bands reading suggests that the market may be in the early phase of a new trend—or at least entering a more volatile state. The current Buy signal gives you a reason to lean bullish, but with price still close to the middle band, follow-through is key.
Here’s what you can do next:
- Pair your signal with another indicator—like RSI above 50 or MACD crossover—to confirm direction
- Set alerts near the upper band if price continues rising, especially with narrowing candles or pullbacks
- Recheck the band width daily—if it keeps growing, you could be entering a stronger phase of momentum
- Don’t ignore fundamentals—macro events or central bank news can override technical signals quickly
Ultimately, Bollinger Bands are best used as a framework—not a script. Your output has highlighted growing volatility, moderate trend strength, and a fresh Buy signal. Now’s the time to monitor price closely and prepare for potential follow-through.