📘 What is Bollinger Bands

Bollinger Bands consist of 3 lines:

• Middle Band (Blue line in center)
  → This is a Simple Moving Average (SMA), usually 20 periods.
  → It represents the average price.
• Upper Band
  → This is the SMA + 2 standard deviations.
  → It shows the upper limit — price is considered relatively high here.
• Lower Band
  → This is the SMA - 2 standard deviations.
  → It shows the lower limit — price is considered relatively low here.

📊 How to Read Bollinger Bands

1. Price Touches or Crosses the Upper Band

• The market is overbought or near a resistance level.
• Possible signal: Take profit / Sell setup if confirmed by other indicators

Example: When gold price candles hit the top blue band, it often pulls back.

2. Price Touches or Crosses the Lower Band

• The market is oversold or near a support level.
• Possible signal: Buy setup if confirmed by bullish reversal candles
• Example: When the candle pierces the bottom blue band, a rebound upward often follows.

3. Price Moves Along the Upper Band

• Indicates strong bullish trend — not necessarily overbought yet.
• Don’t short immediately; wait for reversal confirmation.

4. Price Moves Along the Lower Band

• Indicates strong bearish trend — not necessarily oversold yet.
• Don’t buy too early; wait for reversal signals.

5. Band Width (Distance Between Upper & Lower Bands)

• Narrow Bands (Squeeze) = Low volatility → possible upcoming breakout.
• Wide Bands = High volatility → market might soon consolidate or retrace.

• 🧭 How to Use in Practice (Example Based on Your Chart)
• Looking at your chart:
• Timeframe: M5 (5-minute)
• Price: Around $4100
• You can see candles moving around the middle band, occasionally hitting upper or lower bands.
• When a candle pierced below the lower band (around 4093) and quickly bounced back, that’s a short-term buy signal.
• When candles reached above the upper band (around 4108–4110) and reversed down sharply, that’s a short-term sell signal.