An indicator that allows users to compare volatility and relative price levels over a period of time. The Bollinger Bands are envelopes based on a moving average and a standard deviation which makes the bands widen or narrow relative to the current market volatility.
95% of price action will take place within the Bollinger bands and thus the Bands act as strong areas of support and resistance when the Forex market is without trend. It is possible at times like this to successfully trade the price rising or falling from one Bollinger line to the other. When a trend begins and the volatility of the market increases, the spacing of the Bollinger Bands will widen, and as the trend slows down the Bollinger bands will narrow.