The Bollinger bands, created by John Bollinger in the eighties, measures the volatility of the price through the deviation of two bands, an upper and lower band, from the moving average.

The upper and lower lines shrink when the price barely changes during a specific time frame. However, if there is high volatility, both two lines widen to capture these volatility levels.

This indicator has different applications. Among them, traders frequently use the upper and lower bands to carry out their strategy.

The lower band is used for the buying strategy. Once the price has broken it, the indicator suggests that the likelihood of the price retracing or initiating an upward trend is high. On the other hand, the upper band will help you to pinpoint sell or short points.