Bollinger Bands®

Description:

Bollinger Bands® are a widely used technical analysis tool traders and investors use to gauge market volatility, identify potential trends, and generate trading signals. Developed by John Bollinger in the 1980s, Bollinger Bands are commonly applied to various financial instruments, including stocks, commodities, and currencies. This indicator consists of a moving average and two standard deviation based bands above and below it. This setup helps measure market volatility and price levels relative to previous trades. When the bands tighten, it indicates low volatility or squeeze, while wide bands suggest high volatility. The moving average is preset to to be a 20 period moving average, but this can be adjusted by adjusting the length variable.

Input Parameters:

Length: Number of periods used in the calculation.
Dev.Up: Standard Deviation of the upper band.
Dev.Down: Standard Deviation of the lower band.
Offset: The offset value is used to access the data of any candle or indicator with reference to the current candle, to access the current candle data it will use the offset value of "0", to access previous candle data "-1" offset value will be used, access data of previous to previous "-2" will be used.

Use Cases:

Measuring Volatility: When the bands widen, it indicates increased volatility; when they contract, it signifies decreasing volatility. This information can help traders and investors prepare for potential price movements and identify appropriate entry and exit points.
Market Trends: During an uptrend, prices tend to stay above the middle band (SMA), while in a downtrend, they remain below it. Traders can use this information to establish long or short positions accordingly.
Reversals in Price: When prices reach or breach the upper band, the market may be overbought, and a reversal to the downside could be imminent. Conversely, when prices reach or breach the lower band, the market may be oversold, and a reversal to the upside could be on the horizon.

This feature can be used in: