Bollinger Bands – are advanced technical indicators that consist of three curves: [1]

1. an N-period moving average (MA). Usually simple moving average (SMA)

2. an upper band at K times an N-period standard deviation above the moving average (MA + Kσ), K is usually 2 and N is usually 20 days.

3. a lower band at K times an N-period standard deviation below the moving average (MA − Kσ)

SMA smoothes a data series and makes analyzing volatile data easier. There are different types of MA:

Exponential Moving Average

Simple Moving Average

Triangular Moving Average

Weighted Moving Average

Triple Exponential Moving Average

You can find how to calculate the above MAs at [2]. Bollinger Bands provide a relative definition of high and low. Stockcharts.com has explanation article how to use Bollinger Bands. It also shows examples of signals.

So what follows from many articles about Bollinger Bands that Bollinger Bands technical indicators are powerful tool for technical analysis. If you are interesting to calculate Bollinger Bands in MS Excel you can use instructions for formulas in [5].

References:

1. Bollinger Bands From Wikipedia, the free encyclopedia

2. Moving Averages

3. Advanced Technical Indicators – Bollinger Bands

4. Bollinger Bands

5. Bollinger Band Calculation in MSExcel

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