Bollinger Bands: price against its own range

Bollinger Bands draw an envelope around the price that widens when it swings and narrows when it's quiet. You'll see how they're built and what closes outside them, squeezes and band width can tell you.

Bollinger Bands start with a 20-candle simple average, the middle line. The upper band sits 2 standard deviations above it and the lower band 2 below.

The standard deviation measures how spread out the recent closes are, so the bands widen when the price swings and narrow when it's calm. Move the distance and see how many closes stay inside.

Each bar is how far one of the last 20 closes sits from their average. Short bars mean the closes are bunched together. Long bars mean the price has been swinging.

The standard deviation (σ) sums that up in one number, in dollars. The bands sit 2σ from the middle. Compare a calm stretch with a wild one.

Two common conditions are price above the upper band and price below the lower band. A close out there means the move is big compared with recent swings.

The price doesn't have to come back right away. In a strong climb it can ride along the upper band for hours. Pick a band and look at how long each stay lasted.

When the price goes quiet, the closes bunch up and the bands pinch together. Traders call this a squeeze.

A squeeze doesn't tell you which way the next move goes. It shows the market has been unusually calm, and calm stretches often end with a bigger move. Press play and watch the bands pinch and then open.

Band width is the distance between the bands as a percentage of the middle line. A 4% width on BTC at $64,000 means the bands are about $2,600 apart.

To catch a squeeze on any asset, compare the width with its own average. Band width at or below 0.6× its average means the bands are 40% tighter than usual. Here the average covers the last 100 candles.

This is four days of hourly closes with a few sharp dips. The condition is price below the lower Bollinger band.

Change the period of the bands and replay. A shorter period makes the bands react faster. Under the chart, the same condition runs on the live feed with the period you picked.

Three quick questions, then a bot to build.

Read the strategy and set up a bot that follows it, with the direction and the conditions it names and no others. Passing depends on the build alone. Once it's right, the bot fires and you see what the market did next, which won't always go your way.