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As we said in last section that bollinger Bands are used to measure a market’s volatility. When the bands lie close together, a period of low volatility is indicated. Conversely, as the bands expand, an increase in price action/market volatility is indicated. When the bands have only a slight slope and track approximately parallel for an extended time, the price will generally be found to oscillate between the bands as though in a channel. Bollinger Bands are normally used to decide overbought and oversold circumstances.

Notice on the chart below that when price is in low volatility, the bands are close together. When price moves up, the bands spread apart.

Trading with Bollinger Bands

●If an uptrend is strong it will reach the upper band on a regular basis. Reaching the upper band shows the market is pushing higher and buying activity