What are Bollinger Bands, and how to use them in crypto trading? By Cointelegraph

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What are Bollinger Bands, and how to use them in crypto trading?

Published Sep 23, 2023 08:35AM ET Updated Sep 23, 2023 10:20AM ET

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What are Bollinger Bands, and how to use them in crypto trading?

A technical analysis tool called Bollinger Bands uses price volatility to provide probable entry and exit opportunities in trading. They are made up of two outer bands or lines and a centerline (the simple moving average for a 20-day period), which enlarges and contracts in response to changes in price. For thorough market analysis, they are frequently utilized in conjunction with other technical indicators.

Bollinger Bands were created by John Bollinger in the 1980s. They are a useful technical analysis tool used in cryptocurrency trading and other financial markets to evaluate price volatility, pinpoint probable reversal points, and make trading decisions.

Upper band

Middle band (SMA)

Lower band

Assess price volatility

Identify overbought and oversold conditions

Determine trend direction

Generate reverse signals

Step one: Calculate the SMA

Step two: Calculate the SD

Step three: Construct the upper and lower Bollinger Bands

Step four: Plotting the Bollinger Bands on a price chart

Step five: Interpretation

The Bollinger Band Squeeze strategy for crypto

Bollinger Bands for setting entry and exit points in crypto trades

Combining Bollinger Bands with other trading indicators

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