Bollinger band

Bollinger bands is a technical analysis tool that helps a trader identify when an asset is oversold or overbought. It is an envelope made up of a set of trendlines plotted two standard deviations (positively and negatively) away from a Simple Moving Average (SMA) (the middle line) of a security’s price. The +-2 standard deviations tell us how volatile the security is.

·   Price movement above the upper band may indicate an overbought condition

·   Price movement below the lower band may indicate an oversold condition.

This tool should always be used in combination with Relative Strength Index (RSI).