🎈 Bollinger Bands
Bollinger Bands
(Volatility & Mean Reversion)
Bollinger Bands help you see when a coin is:
Overextended
Ready to snap back
Entering high volatility zones
They’re fantastic for spotting potential reversals or breakout setups.
🧠 Simple Definition
Bollinger Bands are made of:
A middle line → Simple Moving Average (SMA), usually 20-period
An upper band → SMA + volatility (standard deviation)
A lower band → SMA - volatility
The bands expand when volatility is high, and contract when it’s low.
📊 What the Bands Show
Bands expanding
Volatility increasing → Possible breakout soon
Bands contracting
Low volatility → “Squeeze” → Big move may follow
Price touching upper band
Overbought → possible pullback
Price touching lower band
Oversold → possible bounce
📈 Visual Example (Suggested Visual)
🔍 Typical Trading Uses
Mean Reversion → If price is far outside the bands, it often snaps back toward the SMA.
Breakout Setup → After a squeeze (narrow bands), a strong move often happens.
Trend Following → In strong trends, price can "walk the band" (stay near one side).
🤖 How Mandalyze AI Uses Bollinger Bands
Mandalyze AI detects:
Band squeezes → signals incoming volatility
Price touching bands → potential reversal zones
Band breakouts → trend momentum alerts
Example output:
“XRP is entering a Bollinger Band squeeze — expect high volatility soon.”
⚠️ Pro Tips
Don’t trade based on bands alone.
Combine with RSI or MACD for confirmation.
Watch for volume — it often spikes with breakouts.
🧪 In Summary
Bollinger Bands help you spot when:
✅ The market is too hot → pullback risk ✅ The market is too cold → bounce risk ✅ A big move is about to happen
📌 When bands get tight... get ready!
🧭 Next Lesson: Fibonacci Retracement – Spotting Key Levels
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