There are many tecnical indicator in stock chart analysis, one of them is bollinger bands.
Bollinger bands are an effective technical analysis tool that is used to measure the volatility in the market. So what are Bollinger Bands? Bollinger bands are bands plotted above and below a moving average. The recommended moving average is the 20 period average that is an effective representation of the intermediate trend.
Where can we use bollinger bands?
Bollinger bands can be used on any market. They are universal in nature in the sense that you can use them on any timeframe whether it is intraday like 5 minutes, 15 minutes, hourly, 4 hourly or daily, weekly monthly. Bollinger bands help you know whether volatility in the market is low or high. What this means is that prices are swinging wildly ir not.
Volatility is a very important variable for an options trader. The more volatility there is on the underlying stock, the more option price will swing. Now when the volatility in the market is low, these bands get narrow and when the volatility in the market increases,these bands widen too.
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