|8/28/2002 8:37:20 AM
Bollinger Bands® (upper, lower, median)
|Usage||Upper Bollinger Band(days)|
Lower Bollinger Band(days)
Median Bollinger Line(days)
Upper Bollinger Band(days,devs)
Lower Bollinger Band(days,devs)
Median Bollinger Line(days,devs)
|Description||Pioneered by the author of the same name, bollinger bands are statistical measures of relative highs and lows for a stock. By using the designated number of standard deviations from a moving average, an envelope is created around the price of the stock suggesting possible price points of resistance. Popular interpretations of the bollinger bands involve current prices that are touching or moving along a particular band. Additionally, converging or diverging bands may indicate compression or decompression with the stock price.|
Including the upper and lower bollinger bands, there is a third line commonly displayed with the bollinger bands that is the median line. This is an n-period moving average that is used to form the center of the bollinger channel.
The standard deviation parameter is used to control how far the upper and lower bands are positioned from the upper channel. Typically this value defaults to 2, indicating that the extreme high or low for the stock is 2 standard deviations from the center channel.