What is Bollinger Bands?
A standard Bollinger Band set contains a middle moving average and two outer bands. The outer bands respond to recent volatility.
Volatility
Bollinger Bands explained
Bollinger Bands are a volatility indicator built around a moving-average center line with upper and lower bands. AlertoWatch supports the documented fixed 20-period, two-deviation definition.
How it works
As measured volatility rises, the distance between the outer bands generally expands. When volatility falls, the bands generally contract. Price can be compared with or cross a selected band.
How traders often interpret it
Price reaching or closing outside a band can describe strong movement relative to recent volatility; it is not automatically a reversal signal. Narrower or wider bands describe changing volatility conditions.
What it can be useful for
- volatility context
- upper and lower band crossings
- observing compression and expansion
- combining volatility with momentum
Using Bollinger Bands in AlertoWatch
Turn the indicator relationship into a precise monitored condition. These are plain-English rule ideas, not recommendations or promises about market outcomes.
- Alert me when price closes above the upper Bollinger Band on 1h.
- Alert me when price closes below the lower Bollinger Band on 1h.
- Alert me when price crosses the lower band while RSI is below 30.
Limitations
Bollinger Bands do not determine whether price will continue or reverse. In strong trends, price can remain close to one band for an extended period.
FAQ
Do Bollinger Bands predict reversals?
No. They describe volatility and price location relative to recent data.
What does a band squeeze mean?
It describes narrower bands and lower measured volatility, not a guaranteed breakout.
Which Bollinger definition does AlertoWatch use?
The documented implementation uses a 20-period SMA basis and two standard deviations.
Can I alert on Bollinger Band levels?
Yes. Upper, middle, and lower band descriptors are supported by the builder.