Bollinger Bands
Definition
A volatility indicator consisting of a moving average with upper and lower bands set at a specified number of standard deviations.
Explanation
Developed by John Bollinger in the 1980s, Bollinger Bands place bands 2 standard deviations above and below a 20-period simple moving average. When bands contract (squeeze), low volatility suggests a large move is coming. When price touches the upper band, the stock is not necessarily overbought — in strong trends, price can 'walk the band' for extended periods. The %B indicator measures where price falls within the bands (0 = lower band, 1 = upper band).