John Bollinger, a technical trader, created Bollinger Bands as a way to help track an asset. A Bollinger Band is used for technical analysis and comprises three lines:
- An upper band
- A simple moving average (SMA)
- A lower band
The upper and lower bands are typically +/- 2 standard deviations away from the 20-day simple moving average (SMA). When the price touches the upper or lower end of the Bollinger Band, the trader can then determine if the tool deems the asset to be overbought or oversold.
For more information on charts and technical analysis, read our beginner’s guide on how to read crypto charts.
