Bollinger Bands

So what are Bollinger bans? They are curves drawn in and around the price structure that provide relative definitions of high and low.
And what are Bollinger bands used for? Knowing whether prices are high or low, the investor or forex trader can make rational forex investments decisions by comparing price action with the actions of indicators.
What can Bollinger bands be applied to? All most anything currency pairs,indices,futures and mutual funds.

John Bollinger is a giant in today's forex trading community. His Bollinger Bands sharpen the sensitivity of fixed indicators, allowing them to more precisely reflect a market's volatility. By more accurately indication the existing forex market environment, they are seen by many as today's standard and most reliable tool for plotting expected price action.
Mr. John Bollinger notes the following characteristics of Bollinger bands.

• Sharp price changes tend to occur after the bands tighten and as volatility lessens.
• When prices move outside the bands, a continuation of the current trend is implied.
• Bottoms and tops made outside the bands followed by bottoms and tops made inside the bands call for reversals in the trend.
• A move that originates at one band tends to go all the way to the other band

Bollinger bands are plotted at standard deviation levels above and below a moving average. Since standard deviation is a measure of volatility, the bands are self adjusting during volatile forex markets and contracting during calmer periods. The bands bracket approximately 90 percent of the market activity.

The 10 percent outside the bands is most likely going to approximate areas where prices will return to within the bands. When Bollinger bands are flat and narrow, this indicates that price volatility is lower than in previous time periods.
When the bands begin to flare, this indicates increased volatility and the possible inception of a new, strong directional or trend move. Wide bands are a indication of a very strong move.