How to Use Bollinger Bands for Entry & Volatility Reading

Bollinger Bands help measure market volatility and identify breakout/breakdown zones. 🔹 Bands include: Middle Band = 20-day SMA Upper Band = +2 standard deviations Lower Band = -2 standard deviations ✅ How to Use Them: When bands contract → Low volatility = Breakout may come soon When bands expand → High volatility = Avoid fresh entry Price at lower band + reversal candle = Buy signal (in uptrend) Price at upper band + bearish reversal = Potential sell or short (in downtrend) 📌 Example: Stock XYZ consolidates in tight range, Bollinger Bands narrow → A breakout with volume above upper band = Entry signal But avoid chasing after a wide-band rally — wait for pullback or volatility reset 🧠 Use in combo with RSI or volume breakout for best results.