 ### Definition of 'Bollinger Bands'

10/18/ · He used a period moving average, and then created bands that were based on standard deviations. When a stock moves outside the upper-end of a Bollinger Band, it is considered "overbought." In other words, it has gone up too far, too fast. Bollinger Bands consist of a middle band with two outer bands. The middle band is a simple moving average that is usually set at 20 periods. A simple moving average is used because the standard deviation formula also uses a simple moving average. The look-back period for the standard deviation is the same as for the simple moving average. Definition of 'Bollinger Bands' Definition: Bollinger Bands is one of the popular technical analysis tools, where three different lines are drawn, with one below and one above the security price line. Its specific period moving average is denoted as midline to form an ‘envelope’. ### Mutual Funds and Mutual Fund Investing - Fidelity Investments

10/18/ · He used a period moving average, and then created bands that were based on standard deviations. When a stock moves outside the upper-end of a Bollinger Band, it is considered "overbought." In other words, it has gone up too far, too fast. 5/7/ · What Is a Bollinger Band®? A Bollinger Band® is a technical analysis tool defined by a set of trendlines plotted two standard deviations (positively and negatively) away from a simple moving. Bollinger Bands consist of a middle band with two outer bands. The middle band is a simple moving average that is usually set at 20 periods. A simple moving average is used because the standard deviation formula also uses a simple moving average. The look-back period for the standard deviation is the same as for the simple moving average. ### Description

10/18/ · He used a period moving average, and then created bands that were based on standard deviations. When a stock moves outside the upper-end of a Bollinger Band, it is considered "overbought." In other words, it has gone up too far, too fast. 5/7/ · What Is a Bollinger Band®? A Bollinger Band® is a technical analysis tool defined by a set of trendlines plotted two standard deviations (positively and negatively) away from a simple moving. Bollinger Bands consist of a middle band with two outer bands. The middle band is a simple moving average that is usually set at 20 periods. A simple moving average is used because the standard deviation formula also uses a simple moving average. The look-back period for the standard deviation is the same as for the simple moving average.  