Bollinger Bands aren’t just pretty lines they’re a tool to understand volatility and market structure. Here’s how to use them properly:

1️⃣ Identify Trend

  • Price hugging the upper band = strong uptrend.

  • Price hugging the lower band = strong downtrend.

  • Price moving sideways = consolidation (bands narrow).

2️⃣ Look for Reversals at Extremes

  • When price touches the upper band, it’s overextended but not necessarily a sell signal.

  • When price touches the lower band, it’s oversold but not automatically a buy

  • Always confirm with price action or volume.

3️⃣ Use the Middle Band as Dynamic Support/Resistance

  • The 20-period moving average in the middle can act as support in an uptrend and resistance in a downtrend.

  • Price bouncing off it can be a low-risk entry.

4️⃣ Combine with Momentum

  • Use RSI, MACD, or trend structure to avoid chasing moves.

  • Bollinger Bands show volatility, not direction.

5️⃣ Watch for Squeezes

  • Narrowing bands = low volatility → often followed by explosive moves.

  • Breakout direction matters wait for confirmation before entering.

✅ Key takeaway: Bands show volatility extremes, not guaranteed tops or bottoms. Patience and confirmation are your best friends.