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Glossary · Pro tools

Bollinger Bands

A band two standard deviations above and below the 20-day average price.

Why it matters

About 95% of daily closes land inside the bands when a stock moves normally. The bands widen when the stock gets jumpy and narrow when it calms down.

How to read it

A close outside the band is unusual. Narrow bands often come before a big move, in either direction.

Related

VolatilityHow much a price swings around, usually stated as a yearly percentage.RSI (Relative Strength Index)A 0 to 100 gauge of how hard a stock has been bought or sold over the last 14 days.Moving averageThe average closing price over a set number of days, drawn as a line.

In the Cluenex app, this explanation opens next to every bollinger bands figure, with the live reading for the stock you are looking at. Open it in Cluenex