Bollinger Bands is one of forex technical indicators used in technical analysis. It consist of two-three lines, each line have an equal distance to definite amount of usual discrepancies. A band plotted two standard deviations away from a simple moving average.

The lines of Bollinger resembles the envelopes moving averages indicator. The basic distinction between these indicators is that the borders of envelopes are located above and below the line of change in the average certain distance, which is calculated as a percentage, while the boundaries of the Bollinger lines are on the same routes to the final number of standard Deflections.

Bollinger bands are plotted as a rule on the price chart, but they can also be used in the indicator chart (Custom Indicators). Just as in the case of envelopes, the interpretation of the Bollinger bands based on the fact that prices tend to be between the top and the bottom line of the bands.

A special feature of the Bollinger band indicator is its variable width due to the volatility of prices. In times of great price changes (ie the high volatility) of the bands extend much scope for prices to move in. During standstill period, or periods of low volatility, the band contracts keep the prices within its borders.

The following traits are particular to the Bollinger Band:
1. Abrupt changes in prices tend to happen after the band has contracted due to decrease of volatility.
2. If prices break through the upper band, a continuation of the current trend is to be expected.
3. If the pikes and hollows outside the band are followed by pikes and hollows inside the band, a reverse of trend may occur.
4. The price movement that has started from one of the band’s lines usually reaches the opposite one. The last observation is useful for forecasting price guideposts.

Bollinger bands are a couple of values, an “envelope” around a field. To measure the values should be the average of the changing data for a specific time and subtract “the final number of normal deflections for the same period from moving average.