Bollinger Bands: Calm before a big move?
What Bollinger Bands show about volatility, why a squeeze often comes before a big move, and how to practise reading the bands on real NSE charts.
Bands that stretch and squeeze
Bollinger Bands draw a channel around a 20-day average. The bands widen when price swings a lot and tighten when it goes quiet.
What to look for
- Most of the time price stays inside the bands.
- A squeeze (very narrow bands) means volatility is unusually low.
- Quiet periods tend to end with a sharp move. The breakout direction is the clue.
The bands tell you how much price might move, not which way. The break tells you the direction.
In the second half of this chart the bands got very narrow. What do traders call this?
- A squeeze. A big move often follows.
- A crash signal
- Proof the stock will stay flat
Show the answer
A squeeze. A big move often follows.. Narrow bands are a squeeze. Low volatility rarely lasts, so traders watch for the first strong close outside the bands.
Squeeze, then breakout
After weeks of tight trading, the last candle closed above the upper band at ₹267.5 on about 3× normal volume. A strong close outside a squeeze, with volume, often starts a trend.
One close outside the band is a clue. Volume behind it is the confirmation.
Practise Bollinger Bands, free
Reading about it is step one. In MarketSeekho you see a real NSE chart with the future hidden, call Bull or Bhalu, say why, and get graded on your reasoning, not luck.
Common questions
What is Bollinger Bands?
Bollinger Bands draw a channel around a 20-day average. The bands widen when price swings a lot and tighten when it goes quiet.
What should I look for with Bollinger Bands?
Most of the time price stays inside the bands. A squeeze (very narrow bands) means volatility is unusually low. Quiet periods tend to end with a sharp move. The breakout direction is the clue.
How can I practise reading Bollinger Bands for free?
MarketSeekho has a free four-page chapter on Bollinger Bands (learn, answer a question, spot it on a chart, then make a call) and an unlimited Bollinger Bands practice game graded on your reasoning. No sign-up or money needed.