# 🎈 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**.

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### 🧠 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.

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### 📊 What the Bands Show

| Band Behavior             | Market Clue                                      |
| ------------------------- | ------------------------------------------------ |
| 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                       |

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### 📈 Visual Example (Suggested Visual)

<figure><img src="https://4037061125-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FHI9tQPN2ZbRA9yfm9Hjr%2Fuploads%2FQUmKiDfuW5JWCk9bekFA%2Fimage.png?alt=media&#x26;token=8f128374-bbff-4553-ac96-b25f520971e4" alt=""><figcaption></figcaption></figure>

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### 🔍 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).

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### 🤖 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.”

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### ⚠️ Pro Tips

* Don’t trade based on bands alone.
* Combine with **RSI** or **MACD** for confirmation.
* Watch for **volume** — it often spikes with breakouts.

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### 🧪 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!**

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> 🧭 Next Lesson: Fibonacci Retracement – Spotting Key Levels
