Technical analysis · updated October 21, 2026
What are Bollinger Bands and how are they calculated
Bollinger Bands are three lines: the 20-day average price and two bands two standard deviations above and below it. When the price touches the upper band it has risen unusually far for the last few weeks; when it touches the lower band, it has fallen unusually far.
Bollinger Bands formula
- Middle band
- The 20-day average price.
- Upper and lower band
- The average ± 2 standard deviations of the price over 20 days.
- %B
- Where the price sits in the channel: 0 at the lower band, 1 at the upper one.
Worked example
The 20-day average is $100, the standard deviation $5, and today's price $108.
The price is close to the upper band: it has risen a lot compared with the last three weeks.
How to read Bollinger Bands
The bands narrow in calm periods and widen in choppy ones. A long squeeze is often followed by a big move.
When Bollinger Bands can fool you
Strong trends: the price can "ride" the upper band for days on end.
Related terms
Questions about Bollinger Bands
What does it mean when the price breaks out of the bands?
That the move is unusually large compared with the last 20 days. It does not tell you whether it will continue or reverse.
These explanations are for information only. They are not a recommendation to buy or sell.
Back to the glossary