Bollinger Bands adapt their width to recent volatility

Dukascopy explains Bollinger Bands as a moving average accompanied by upper and lower bands derived from price dispersion. The familiar setting uses a twenty-period average and bands two standard deviations away. Wider bands reflect greater recent variation, while narrower bands reflect a quieter observation window.

The guide considers how traders use the display to examine relative price location, contractions and possible breakouts. A price near an outer band is high or low relative to the recent calculation; that description does not establish an intrinsic valuation or guarantee a move back to the average.

The article’s strategy examples are therefore best read as possible interpretations requiring further evidence. Settings and market regime can change the appearance and usefulness of a signal. This digest presents the indicator’s structure without claiming that a statistical band contains a fixed proportion of every real-world market’s future prices.