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Response:

Calculated Shard: 62 (from laksa013)

2. Crawled Status Check

Query:

curl -X POST \
  'http://laksa062.int.ahrefs:8124/' \
  -H 'Content-Type: text/plain' \
  -H 'X-ClickHouse-Database: crawler3' \
  -H 'Authorization: Basic YXBpOg==' \
  -d 'SELECT getAhrefsURLFromUnparsed(src_unparsed) AS found_url, ifNull(toUnixTimestamp(download_stamp), 0) AS crawl_time, ifNull(toUnixTimestamp(props_url_first_seen), 0) AS first_indexed_time, download_http_code AS http_code, src_unparsed AS src_unparsed, src_root_hash AS src_root_hash, history_drop_reason AS history_drop_reason, meta_title AS meta_title, meta_descriptions AS meta_descriptions, attrs_boilerpipe_text AS attrs_boilerpipe_text, attrs_markdown AS attrs_markdown, attrs_readable_markdown AS attrs_readable_markdown, meta_canonical AS meta_canonical FROM crawler3.page_info_local FINAL PREWHERE (src_root_hash, src_unparsed) IN ((getAhrefsRootHashFromUnparsed(getAhrefsUnparsedNoserviceFromURL(\'https://www.britannica.com/money/bollinger-bands-indicator\')), getAhrefsUnparsedNoserviceFromURL(\'https://www.britannica.com/money/bollinger-bands-indicator\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/www.britannica.com\/money\/bollinger-bands-indicator","crawl_time":1775687753,"first_indexed_time":1689226494,"http_code":200,"src_unparsed":"com,britannica!www,\/money\/bollinger-bands-indicator s443","src_root_hash":"5455945239613777662","history_drop_reason":null,"meta_title":"Bollinger Bands Explained: Formula & Trading Strategies | Britannica Money","meta_descriptions":["Bollinger Bands are a popular technical analysis tool used by stock market traders to assess price volatility..."],"attrs_boilerpipe_text":"Open full sized image\nAre you focused on the map or the landscape?\n© yossarian6\/stock.adobe.com\nThey say the map is not the territory. That might sound like a no-brainer. Yet, we’re all prone to occasionally fixating on a map such that we miss the landscape right in front of us.\nIn the financial markets,\ntechnical indicators\nare like maps. They can give shape to a dynamic market environment, making price movements clearer to see and easier to interpret. But on the flip side, indicators can also oversimplify or even blot out the very thing they’re trying to analyze: the price action itself.\nPrice action trading focuses almost solely on the movement of price over time.\nTraders who follow price action may use minimal technical indicators or avoid them altogether.\nPrice action analysis focuses on trends, chart patterns, and significant historical price events and movements.\nAnd that’s why some traders prefer to ditch the proverbial map by chucking most or all indicators, opting for a more minimalist approach. This is what\nprice action trading\nis all about: working directly with an asset’s price and price history to analyze and anticipate its potential direction.\nWhat is price action trading?\nPrice action\nrefers to the characteristics of an asset’s price movements over time. These price movements are often plotted on a chart and displayed without supplemental technical indicators (except maybe volume). Although such bare charts may, at first, seem a little too minimal to provide much information, focusing on price alone can help uncover nuanced movements that might be difficult to detect via an indicator.\nPrice action trading\nis a method of\nfinancial analysis\nand speculation that generates its insights and actions solely from the interpretation of price movements.\nWilliam Blake suggested we can “see a world in a grain of sand.” In this case, it’s about observing the movement of price—from small grains to large gaps—to see what it might indicate in terms of future shape and direction.\nWhy eliminate or minimize indicators?\nIndicators were designed to emphasize certain technical aspects of the markets (including volume, trend, momentum, and so on). But in doing so, they exclude other technical aspects. This is why traders often combine indicators—to compensate for gaps in technical perspective.\nFor all the insights indicators may provide, they invariably\nproduce\nblind spots:\nLagging indicators that trail behind current prices (such as moving averages) can sometimes divert attention away from market conditions taking shape in the present.\nIndicators designed for specific functions can obscure other important details.\nMultiple indicators can overcomplicate market scenarios, sometimes yielding conflicting readings that can lead to the dreaded “analysis paralysis.”\nThe quantity of indicators doesn’t always correlate to the quality or adequacy of market information.\nAnalyzing price action\nIf you plan to analyze or trade markets based solely on current and historical prices, you’re likely to focus on three things: trends, chart patterns, and significant technical events.\nTrends.\nIn general, an uptrend is defined by higher highs and higher lows (see figure 1), while a downtrend consists of lower lows and lower highs. So, is a stock trending up, down, or sideways? Some traders draw simple trendlines to identify these movements. Other traders might use a formula to detect trends.\nChart patterns.\nThe chart pattern universe is extensive. There are classic chart patterns, such as the symmetrical triangle (see figure 1). You can also study a smaller range of sessions by analyzing groups of bars, such as the bullish engulfing candlestick pattern (figure 1).\nOpen full sized image\nFigure 1: WATCHING THE PRICE ACTION.\nSimple patterns and single-period movements can sometimes help you see the big picture.\nImage source: StockCharts.com. Annotations by Encyclopædia Britannica, Inc.\nTechnical events.\nPrices may move according to or against expectations at a critical technical juncture, such as near a support and resistance level, trendline, or major pattern. For price action traders, these events and their outcomes are important. They’re historical reference points that help guide future trading setups and decisions.\nPrice floors and ceilings\nNeed a refresher on support, resistance, and spotting price trends?\nThis is the place.\nAdvantages and limitations of using price action\nA price action approach allows you to view price charts without clutter or extra biases generated by indicators. Ultimately, this allows you to interpret prices directly instead of interpreting an interpretation.\nThe big limitation is that price action readings can be just as subjective and variable as most indicator readings. Two traders will interpret the same price action as differently as they might indicator data.\nIt probably sounds like jumping from one frying pan (using indicators) into another (using price action). But there is no holy grail when it comes to analyzing and trading the markets. Instead, it’s best to find an approach that resonates with your trading personality, your way of thinking, your goals, and your risk tolerance.\nThe bottom line\nAs with all technical trading approaches, price action analysis is a blend of art and science. It isn’t for everyone. But if it resonates with the way you prefer to analyze and trade markets, then perhaps this discipline is worth a try.\nYou can also create a hybrid or custom approach that focuses on price action, but also includes a few\ntechnical\nor\nfundamental\nindicators. Again, reading the charts is a blend of art and science.","attrs_markdown":"[History & Society](https:\/\/www.britannica.com\/History-Society)[Science & Tech](https:\/\/www.britannica.com\/Science-Tech)[Biographies](https:\/\/www.britannica.com\/Biographies)[Animals & Nature](https:\/\/www.britannica.com\/Animals-Nature)[Geography & Travel](https:\/\/www.britannica.com\/Geography-Travel)[Arts & Culture](https:\/\/www.britannica.com\/Arts-Culture)[ProCon](https:\/\/www.britannica.com\/procon)[Games & Quizzes](https:\/\/www.britannica.com\/quiz\/browse)[Videos](https:\/\/www.britannica.com\/videos)[On This Day](https:\/\/www.britannica.com\/on-this-day)[One Good Fact](https:\/\/www.britannica.com\/one-good-fact)[Dictionary](https:\/\/www.britannica.com\/dictionary)\n\n- [Lifestyles & Social Issues](https:\/\/www.britannica.com\/browse\/Lifestyles-Social-Issues)\n- [Philosophy & Religion](https:\/\/www.britannica.com\/browse\/Philosophy-Religion)\n- [Politics, Law & 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Finance](https:\/\/www.britannica.com\/money\/browse\/household-finance)\n\n[Investing](https:\/\/www.britannica.com\/money\/browse\/investing)\n\n[Trading](https:\/\/www.britannica.com\/money\/browse\/Trading)\n\n[Retirement](https:\/\/www.britannica.com\/money\/browse\/retirement)\n\n[Companies](https:\/\/www.britannica.com\/money\/browse\/Companies)\n\n[Biographies](https:\/\/www.britannica.com\/money\/browse\/Biographies)\n\n[Finance & the Economy](https:\/\/www.britannica.com\/money\/browse\/history-and-theory)\n\nTable of Contents\n***\n- [Introduction](https:\/\/www.britannica.com\/money\/bollinger-bands-indicator#ref2234838-1)\n- [The mechanics of Bollinger Bands](https:\/\/www.britannica.com\/money\/bollinger-bands-indicator#ref358294)\n- [Comparing Bollinger Bands with other indicators](https:\/\/www.britannica.com\/money\/bollinger-bands-indicator#ref358295)\n- [Using Bollinger Bands in a trading strategy](https:\/\/www.britannica.com\/money\/bollinger-bands-indicator#ref358296)\n- [The bottom line](https:\/\/www.britannica.com\/money\/bollinger-bands-indicator#ref358297)\n- [References](https:\/\/www.britannica.com\/money\/bollinger-bands-indicator#ref2234838-references)\n\nRead More\n\n[![A dollar bill folded into a paper crane appears next to the words \"Stocks vs. Bonds.\"](https:\/\/cdn.britannica.com\/53\/272153-138-C51607E2\/basic-investment-types-stocks-bonds.jpg?c=crop&h=40&w=50) stock](https:\/\/www.britannica.com\/money\/stock-finance)\n\n[![Man in a black suit and tie surfing on a blue surfboard in front of a large ocean wave.](https:\/\/cdn.britannica.com\/86\/273386-159-3B08D3B4\/Trend-Following-photo-illustration-image-Businessman-surfing.jpg?c=crop&h=40&w=50) Trend following: A time-tested strategy for riding market momentum](https:\/\/www.britannica.com\/money\/trend-following-trading-strategy)\n\n[![VWAP, photo illustration image: Volatile vs. stable charts balanced on scale.](https:\/\/cdn.britannica.com\/23\/271623-159-D3A8C2A6\/VWAP-photo-illustration-image-Volatile-vs-stable-charts-balanced-on-scale.jpg?c=crop&h=40&w=50) Volume-weighted average price (VWAP): A versatile technical indicator for pros and day traders](https:\/\/www.britannica.com\/money\/volume-weighted-average-price)\n\nTable Of Contents\n\n[Trading](https:\/\/www.britannica.com\/money\/browse\/Trading)\n\n[Technical Analysis](https:\/\/www.britannica.com\/money\/browse\/Technical-Analysis)\n\n# Bollinger Bands: A powerful technical tool for traders\nDual insights from a single indicator.\n\nPrint\n\nCite\n\nShare\n\n**Written by**Brian Lund\n\n[Brian Lund](https:\/\/www.britannica.com\/money\/author\/brian-lund\/12930358)\n\nBrian Lund is a Southern California–based fintech executive, author, and trader with over 35 years of market experience. He has been a frequent guest on CNBC and his articles have appeared in the *Wall Street Journal*, Yahoo! Finance, CNN, *Traders World* magazine, AOL’s Daily Finance, and other domestic and international outlets.\n\n**Fact-checked by**Karl Montevirgen\n\n[Karl Montevirgen](https:\/\/www.britannica.com\/money\/author\/karl-montevirgen\/12874516)\n\nKarl Montevirgen is a professional freelance writer who specializes in the fields of finance, cryptomarkets, content strategy, and the arts. Karl works with several organizations in the equities, futures, physical metals, and blockchain industries. He holds FINRA Series 3 and Series 34 licenses in addition to a dual MFA in critical studies\/writing and music composition from the California Institute of the Arts.\n\nTable of Contents\n***\n- [Introduction](https:\/\/www.britannica.com\/money\/bollinger-bands-indicator#ref2234838-1)\n- [The mechanics of Bollinger Bands](https:\/\/www.britannica.com\/money\/bollinger-bands-indicator#ref358294)\n- [Comparing Bollinger Bands with other indicators](https:\/\/www.britannica.com\/money\/bollinger-bands-indicator#ref358295)\n- [Using Bollinger Bands in a trading strategy](https:\/\/www.britannica.com\/money\/bollinger-bands-indicator#ref358296)\n- [The bottom line](https:\/\/www.britannica.com\/money\/bollinger-bands-indicator#ref358297)\n- [References](https:\/\/www.britannica.com\/money\/bollinger-bands-indicator#ref2234838-references)\n\nRead More\n\n[![A dollar bill folded into a paper crane appears next to the words \"Stocks vs. Bonds.\"](https:\/\/cdn.britannica.com\/53\/272153-138-C51607E2\/basic-investment-types-stocks-bonds.jpg?c=crop&h=40&w=50) stock](https:\/\/www.britannica.com\/money\/stock-finance)\n\n[![Man in a black suit and tie surfing on a blue surfboard in front of a large ocean wave.](https:\/\/cdn.britannica.com\/86\/273386-159-3B08D3B4\/Trend-Following-photo-illustration-image-Businessman-surfing.jpg?c=crop&h=40&w=50) Trend following: A time-tested strategy for riding market momentum](https:\/\/www.britannica.com\/money\/trend-following-trading-strategy)\n\n[![VWAP, photo illustration image: Volatile vs. stable charts balanced on scale.](https:\/\/cdn.britannica.com\/23\/271623-159-D3A8C2A6\/VWAP-photo-illustration-image-Volatile-vs-stable-charts-balanced-on-scale.jpg?c=crop&h=40&w=50) Volume-weighted average price (VWAP): A versatile technical indicator for pros and day traders](https:\/\/www.britannica.com\/money\/volume-weighted-average-price)\n\nTable Of Contents\n\n![Bollinger Bands plotted on a price chart.](https:\/\/cdn.britannica.com\/53\/246253-050-9475C22D\/bollinger-bands.jpg?w=385)\n\nOpen full sized image\n\nWatch price trends plus volatility.\n\nSource: StockCharts.com. Annotations by Encyclopædia Britannica, Inc.\n\nBollinger Bands are a popular [technical analysis](https:\/\/www.britannica.com\/money\/what-is-technical-analysis) tool used by stock market traders to assess price volatility and identify potential buy or sell signals. Developed in the early 1980s by John Bollinger, a renowned trader and Chartered Market Technician (CMT), Bollinger Bands provide insights into market conditions by combining the concepts of a moving average and a volatility measure in one indicator.\n\nAccording to Bollinger, his namesake indicator is not just for stocks, but can also be used for [futures](https:\/\/www.britannica.com\/money\/what-is-a-futures-contract), [commodities](https:\/\/www.britannica.com\/money\/what-are-commodities), and [currency trading](https:\/\/www.britannica.com\/money\/retail-forex-trading). In addition, Bollinger Bands are time frame agnostic, meaning they apply to all time period charts.\n\n## Key Points\n- Bollinger Bands track both market volatility and directional trends.\n- The indicator consists of a simple moving average and an upper and lower band representing standard deviations from the moving average.\n- Bollinger Bands can be used on any actively traded financial asset and across multiple time frames.\n\n## The mechanics of Bollinger Bands\nBollinger Bands combine a simple moving average (SMA) and a measure of price volatility via standard deviations (SD). The calculation of Bollinger Bands involves three main components:\n\n- **Simple moving average.** The SMA is calculated by summing up a certain number of closing prices and dividing the result by the chosen period. For example, a 20-day SMA adds up the closing prices of the past 20 trading days and divides the total by 20.\n- **Standard deviation.** The standard deviation measures how spread out prices are from the average. It quantifies the volatility of the price series. The standard deviation is usually calculated using the same period as the SMA.\n- **Upper and lower bands.** Bollinger Bands are typically constructed by adding and subtracting a certain number of standard deviations (usually two) from the SMA. This creates an upper band and a lower band that envelop the price series, forming a channel that expands and contracts as volatility increases and decreases.\n\nHere’s the formula for calculating Bollinger Bands (at two standard deviations) based on a 20-day simple moving average:\n\n- Upper band = 20-day SMA + (20-day SD x 2)\n- Middle band = 20-day SMA\n- Lower band = 20-day SMA – (20-day SD x 2)\n\n![Bollinger Bands plotted on a price chart.](https:\/\/cdn.britannica.com\/53\/246253-050-9475C22D\/bollinger-bands.jpg?w=800)\n\nOpen full sized image\n\n**Figure 1: TRADING BAND-AID?** Shares of electric vehicle maker **Tesla** (TSLA) were among the most volatile stocks in the S\\&P 500 Index (SPX) in 2022 and 2023. Note the wide upper and lower Bollinger Bands (solid purple lines) around the moving average (dotted purple line). *For educational purposes only.*\n\nSource: StockCharts.com. Annotations by Encyclopædia Britannica, Inc.\n\n## Comparing Bollinger Bands with other indicators\nSome [technical indicators](https:\/\/www.britannica.com\/money\/technical-indicator-types) attempt to measure volatility, like average true range (ATR), standard deviations, or the CBOE Volatility Index (VIX). Others are designed to identify trends, such as [moving averages](https:\/\/www.britannica.com\/money\/what-are-moving-averages), parabolic SAR, and average directional index (ADX).\n\nBollinger Bands are unique in that they comprise both a moving average *and* standard deviations. By combining these two elements, Bollinger Bands capture both the trend (through the moving average) and volatility (through the standard deviations). This makes them particularly useful for identifying periods of high or low volatility and potential price reversals.\n\nBecause Bollinger Bands are a particularly visual technical indicator, those dynamic changes in [volatility](https:\/\/www.britannica.com\/money\/stock-market-volatility) are easy to see on a price chart, especially at the extremes. Some traders incorporate these visual cues into their strategies by analyzing band width—as well as where price is in relation to the bands—and then combining this analysis with other indicators.\n\n## Using Bollinger Bands in a trading strategy\nBollinger Bands can help traders identify overbought and oversold conditions based on the concept of mean reversion, which suggests that, over time, an asset will tend to converge on its average or mean price.\n\nWhen price is trading near the upper band, it indicates that a stock is overbought and may be due for a price correction. When the price is near the lower band, it suggests that the stock is oversold and may be ripe for a rebound.\n\nThis can provide a strategy for range-bound markets, with the trader going long when price touches the lower band and short when it touches the top band. However, when a stock is moving in a strong trend, these signals may not work as well. Trending prices can continue to “walk” along the upper or lower bands for an extended time.\n\nOne way traders can adapt a Bollinger Bands strategy in a trending market is by identifying the direction of the trend and then taking only corresponding trades. For example, if the trend is up, a trader would buy when price touches the bottom band, but would not short when price touches the top band. Instead, they might use the next touch of the (rising) lower band to add to their position.\n\n## The bottom line\nBollinger Bands can be a powerful technical tool for stock market traders. By combining a moving average with a measure of price volatility, Bollinger Bands offer insights into potential price reversals, overbought or oversold conditions, and market volatility.\n\nRemember that no single indicator can guarantee successful trading outcomes. Traders should always exercise caution and conduct [thorough analysis](https:\/\/www.britannica.com\/money\/what-is-due-diligence) before making investment decisions.\n\n*This article is intended for educational purposes only and not as an endorsement of a particular financial strategy. Encyclopædia Britannica, Inc., does not provide legal, tax, or investment advice.*\n## References\n- [Bollinger Bands](https:\/\/www.bollingerbands.com\/) \\| bollingerbands.com\n- [What Are Bollinger Bands?](https:\/\/school.stockcharts.com\/doku.php?id=technical_indicators:bollinger_bands) \\| school.stockcharts.com\n\nTable of Contents\n***\n- [Introduction](https:\/\/www.britannica.com\/money\/price-action-trading-explained#ref2234894-1)\n- [What is price action trading?](https:\/\/www.britannica.com\/money\/price-action-trading-explained#ref354673)\n- [Why eliminate or minimize indicators?](https:\/\/www.britannica.com\/money\/price-action-trading-explained#ref354674)\n- [Analyzing price action](https:\/\/www.britannica.com\/money\/price-action-trading-explained#ref354675)\n- [Advantages and limitations of using price action](https:\/\/www.britannica.com\/money\/price-action-trading-explained#ref354676)\n- [The bottom line](https:\/\/www.britannica.com\/money\/price-action-trading-explained#ref354677)\n\nRead More\n\n[![Man in a black suit and tie surfing on a blue surfboard in front of a large ocean wave.](https:\/\/cdn.britannica.com\/86\/273386-159-3B08D3B4\/Trend-Following-photo-illustration-image-Businessman-surfing.jpg?c=crop&h=40&w=50) Trend following: A time-tested strategy for riding market momentum](https:\/\/www.britannica.com\/money\/trend-following-trading-strategy)\n\n[![VWAP, photo illustration image: Volatile vs. stable charts balanced on scale.](https:\/\/cdn.britannica.com\/23\/271623-159-D3A8C2A6\/VWAP-photo-illustration-image-Volatile-vs-stable-charts-balanced-on-scale.jpg?c=crop&h=40&w=50) Volume-weighted average price (VWAP): A versatile technical indicator for pros and day traders](https:\/\/www.britannica.com\/money\/volume-weighted-average-price)\n\n[![A price chart shows a stock in an uptrend and two moving averages.](https:\/\/cdn.britannica.com\/64\/270764-050-D279079F\/smas-and-the-long-trend.jpg?c=crop&h=40&w=50) Simple moving average vs. exponential moving average](https:\/\/www.britannica.com\/money\/simple-vs-exponential-moving-averages)\n\nTable Of Contents\n\n[Trading](https:\/\/www.britannica.com\/money\/browse\/Trading)\n\n[Technical Analysis](https:\/\/www.britannica.com\/money\/browse\/Technical-Analysis)\n\n# Trading with price action analysis\nExplore price territory without a map.\n\nPrint\n\nCite\n\nShare\n\n**Written by**Karl Montevirgen\n\n[Karl Montevirgen](https:\/\/www.britannica.com\/money\/author\/karl-montevirgen\/12874516)\n\nKarl Montevirgen is a professional freelance writer who specializes in the fields of finance, cryptomarkets, content strategy, and the arts. Karl works with several organizations in the equities, futures, physical metals, and blockchain industries. He holds FINRA Series 3 and Series 34 licenses in addition to a dual MFA in critical studies\/writing and music composition from the California Institute of the Arts.\n\n**Fact-checked by**Doug Ashburn\n\n[Doug Ashburn](https:\/\/www.britannica.com\/money\/author\/douglas-ashburn\/12849777)\n\nDoug is a Chartered Alternative Investment Analyst who spent more than 20 years as a derivatives market maker and asset manager before “reincarnating” as a financial media professional a decade ago.\n\nTable of Contents\n***\n- [Introduction](https:\/\/www.britannica.com\/money\/price-action-trading-explained#ref2234894-1)\n- [What is price action trading?](https:\/\/www.britannica.com\/money\/price-action-trading-explained#ref354673)\n- [Why eliminate or minimize indicators?](https:\/\/www.britannica.com\/money\/price-action-trading-explained#ref354674)\n- [Analyzing price action](https:\/\/www.britannica.com\/money\/price-action-trading-explained#ref354675)\n- [Advantages and limitations of using price action](https:\/\/www.britannica.com\/money\/price-action-trading-explained#ref354676)\n- [The bottom line](https:\/\/www.britannica.com\/money\/price-action-trading-explained#ref354677)\n\nRead More\n\n[![Man in a black suit and tie surfing on a blue surfboard in front of a large ocean wave.](https:\/\/cdn.britannica.com\/86\/273386-159-3B08D3B4\/Trend-Following-photo-illustration-image-Businessman-surfing.jpg?c=crop&h=40&w=50) Trend following: A time-tested strategy for riding market momentum](https:\/\/www.britannica.com\/money\/trend-following-trading-strategy)\n\n[![VWAP, photo illustration image: Volatile vs. stable charts balanced on scale.](https:\/\/cdn.britannica.com\/23\/271623-159-D3A8C2A6\/VWAP-photo-illustration-image-Volatile-vs-stable-charts-balanced-on-scale.jpg?c=crop&h=40&w=50) Volume-weighted average price (VWAP): A versatile technical indicator for pros and day traders](https:\/\/www.britannica.com\/money\/volume-weighted-average-price)\n\n[![A price chart shows a stock in an uptrend and two moving averages.](https:\/\/cdn.britannica.com\/64\/270764-050-D279079F\/smas-and-the-long-trend.jpg?c=crop&h=40&w=50) Simple moving average vs. exponential moving average](https:\/\/www.britannica.com\/money\/simple-vs-exponential-moving-averages)\n\nTable Of Contents\n\n![Photo of a woman standing in front of a landscape and checking a map.](https:\/\/cdn.britannica.com\/03\/239803-050-B9EFDDF3\/Travel-woman-with-backpack-checks-map.jpg?w=385)\n\nOpen full sized image\n\nAre you focused on the map or the landscape?\n\n© yossarian6\/stock.adobe.com\n\nThey say the map is not the territory. That might sound like a no-brainer. Yet, we’re all prone to occasionally fixating on a map such that we miss the landscape right in front of us.\n\nIn the financial markets, [technical indicators](https:\/\/www.britannica.com\/money\/what-is-technical-analysis) are like maps. They can give shape to a dynamic market environment, making price movements clearer to see and easier to interpret. But on the flip side, indicators can also oversimplify or even blot out the very thing they’re trying to analyze: the price action itself.\n\n##\n- Price action trading focuses almost solely on the movement of price over time.\n- Traders who follow price action may use minimal technical indicators or avoid them altogether.\n- Price action analysis focuses on trends, chart patterns, and significant historical price events and movements.\n\nAnd that’s why some traders prefer to ditch the proverbial map by chucking most or all indicators, opting for a more minimalist approach. This is what **price action trading** is all about: working directly with an asset’s price and price history to analyze and anticipate its potential direction.\n\n## What is price action trading?\n**Price action** refers to the characteristics of an asset’s price movements over time. These price movements are often plotted on a chart and displayed without supplemental technical indicators (except maybe volume). Although such bare charts may, at first, seem a little too minimal to provide much information, focusing on price alone can help uncover nuanced movements that might be difficult to detect via an indicator.\n\n**Price action trading** is a method of [financial analysis](https:\/\/www.britannica.com\/money\/how-to-analyze-a-stock) and speculation that generates its insights and actions solely from the interpretation of price movements.\n\nWilliam Blake suggested we can “see a world in a grain of sand.” In this case, it’s about observing the movement of price—from small grains to large gaps—to see what it might indicate in terms of future shape and direction.\n\n## Why eliminate or minimize indicators?\nIndicators were designed to emphasize certain technical aspects of the markets (including volume, trend, momentum, and so on). But in doing so, they exclude other technical aspects. This is why traders often combine indicators—to compensate for gaps in technical perspective.\n\nFor all the insights indicators may provide, they invariably *produce* blind spots:\n\n- Lagging indicators that trail behind current prices (such as moving averages) can sometimes divert attention away from market conditions taking shape in the present.\n- Indicators designed for specific functions can obscure other important details.\n- Multiple indicators can overcomplicate market scenarios, sometimes yielding conflicting readings that can lead to the dreaded “analysis paralysis.”\n- The quantity of indicators doesn’t always correlate to the quality or adequacy of market information.\n## Analyzing price action\nIf you plan to analyze or trade markets based solely on current and historical prices, you’re likely to focus on three things: trends, chart patterns, and significant technical events.\n\n**Trends.** In general, an uptrend is defined by higher highs and higher lows (see figure 1), while a downtrend consists of lower lows and lower highs. So, is a stock trending up, down, or sideways? Some traders draw simple trendlines to identify these movements. Other traders might use a formula to detect trends.\n\n**Chart patterns.** The chart pattern universe is extensive. There are classic chart patterns, such as the symmetrical triangle (see figure 1). You can also study a smaller range of sessions by analyzing groups of bars, such as the bullish engulfing candlestick pattern (figure 1).\n\n![Watching the price action](https:\/\/cdn.britannica.com\/36\/240236-050-D6D4520F\/watching-the-price-action.jpg?w=800)\n\nOpen full sized image\n\n**Figure 1: WATCHING THE PRICE ACTION.** Simple patterns and single-period movements can sometimes help you see the big picture.\n\nImage source: StockCharts.com. Annotations by Encyclopædia Britannica, Inc.\n\n**Technical events.** Prices may move according to or against expectations at a critical technical juncture, such as near a support and resistance level, trendline, or major pattern. For price action traders, these events and their outcomes are important. They’re historical reference points that help guide future trading setups and decisions.\n\n## Price floors and ceilings\nNeed a refresher on support, resistance, and spotting price trends? [This is the place.](https:\/\/www.britannica.com\/money\/what-are-support-resistance)\n\n## Advantages and limitations of using price action\nA price action approach allows you to view price charts without clutter or extra biases generated by indicators. Ultimately, this allows you to interpret prices directly instead of interpreting an interpretation.\n\nThe big limitation is that price action readings can be just as subjective and variable as most indicator readings. Two traders will interpret the same price action as differently as they might indicator data.\n\nIt probably sounds like jumping from one frying pan (using indicators) into another (using price action). But there is no holy grail when it comes to analyzing and trading the markets. Instead, it’s best to find an approach that resonates with your trading personality, your way of thinking, your goals, and your risk tolerance.\n\n## The bottom line\nAs with all technical trading approaches, price action analysis is a blend of art and science. It isn’t for everyone. But if it resonates with the way you prefer to analyze and trade markets, then perhaps this discipline is worth a try.\n\nYou can also create a hybrid or custom approach that focuses on price action, but also includes a few [technical](https:\/\/www.britannica.com\/money\/what-is-technical-analysis) or [fundamental](https:\/\/www.britannica.com\/money\/what-is-fundamental-analysis) indicators. Again, reading the charts is a blend of art and science.\n\n[![Britannica Money Logo](https:\/\/cdn.britannica.com\/money\/assets\/Money-475x60-footer-2x.png?h=47&w=390)](https:\/\/www.britannica.com\/money)\n\n[About Us](https:\/\/www.britannica.com\/money\/about)[Privacy Policy](https:\/\/corporate.britannica.com\/privacy-policy-2)[Terms & Conditions](https:\/\/corporate.britannica.com\/termsofuse.html)\n\n© 2026 Encyclopædia Britannica, Inc.","attrs_readable_markdown":"![Photo of a woman standing in front of a landscape and checking a map.](https:\/\/cdn.britannica.com\/03\/239803-050-B9EFDDF3\/Travel-woman-with-backpack-checks-map.jpg?w=385)\n\nOpen full sized image\n\nAre you focused on the map or the landscape?\n\n© yossarian6\/stock.adobe.com\n\nThey say the map is not the territory. That might sound like a no-brainer. Yet, we’re all prone to occasionally fixating on a map such that we miss the landscape right in front of us.\n\nIn the financial markets, [technical indicators](https:\/\/www.britannica.com\/money\/what-is-technical-analysis) are like maps. They can give shape to a dynamic market environment, making price movements clearer to see and easier to interpret. But on the flip side, indicators can also oversimplify or even blot out the very thing they’re trying to analyze: the price action itself.\n\n- Price action trading focuses almost solely on the movement of price over time.\n- Traders who follow price action may use minimal technical indicators or avoid them altogether.\n- Price action analysis focuses on trends, chart patterns, and significant historical price events and movements.\n\nAnd that’s why some traders prefer to ditch the proverbial map by chucking most or all indicators, opting for a more minimalist approach. This is what **price action trading** is all about: working directly with an asset’s price and price history to analyze and anticipate its potential direction.\n\n## What is price action trading?\n**Price action** refers to the characteristics of an asset’s price movements over time. These price movements are often plotted on a chart and displayed without supplemental technical indicators (except maybe volume). Although such bare charts may, at first, seem a little too minimal to provide much information, focusing on price alone can help uncover nuanced movements that might be difficult to detect via an indicator.\n\n**Price action trading** is a method of [financial analysis](https:\/\/www.britannica.com\/money\/how-to-analyze-a-stock) and speculation that generates its insights and actions solely from the interpretation of price movements.\n\nWilliam Blake suggested we can “see a world in a grain of sand.” In this case, it’s about observing the movement of price—from small grains to large gaps—to see what it might indicate in terms of future shape and direction.\n\n## Why eliminate or minimize indicators?\nIndicators were designed to emphasize certain technical aspects of the markets (including volume, trend, momentum, and so on). But in doing so, they exclude other technical aspects. This is why traders often combine indicators—to compensate for gaps in technical perspective.\n\nFor all the insights indicators may provide, they invariably *produce* blind spots:\n\n- Lagging indicators that trail behind current prices (such as moving averages) can sometimes divert attention away from market conditions taking shape in the present.\n- Indicators designed for specific functions can obscure other important details.\n- Multiple indicators can overcomplicate market scenarios, sometimes yielding conflicting readings that can lead to the dreaded “analysis paralysis.”\n- The quantity of indicators doesn’t always correlate to the quality or adequacy of market information.\n## Analyzing price action\nIf you plan to analyze or trade markets based solely on current and historical prices, you’re likely to focus on three things: trends, chart patterns, and significant technical events.\n\n**Trends.** In general, an uptrend is defined by higher highs and higher lows (see figure 1), while a downtrend consists of lower lows and lower highs. So, is a stock trending up, down, or sideways? Some traders draw simple trendlines to identify these movements. Other traders might use a formula to detect trends.\n\n**Chart patterns.** The chart pattern universe is extensive. There are classic chart patterns, such as the symmetrical triangle (see figure 1). You can also study a smaller range of sessions by analyzing groups of bars, such as the bullish engulfing candlestick pattern (figure 1).\n\n![Watching the price action](https:\/\/cdn.britannica.com\/36\/240236-050-D6D4520F\/watching-the-price-action.jpg?w=800)\n\nOpen full sized image\n\n**Figure 1: WATCHING THE PRICE ACTION.** Simple patterns and single-period movements can sometimes help you see the big picture.\n\nImage source: StockCharts.com. Annotations by Encyclopædia Britannica, Inc.\n\n**Technical events.** Prices may move according to or against expectations at a critical technical juncture, such as near a support and resistance level, trendline, or major pattern. For price action traders, these events and their outcomes are important. They’re historical reference points that help guide future trading setups and decisions.\n\n## Price floors and ceilings\nNeed a refresher on support, resistance, and spotting price trends? [This is the place.](https:\/\/www.britannica.com\/money\/what-are-support-resistance)\n\n## Advantages and limitations of using price action\nA price action approach allows you to view price charts without clutter or extra biases generated by indicators. Ultimately, this allows you to interpret prices directly instead of interpreting an interpretation.\n\nThe big limitation is that price action readings can be just as subjective and variable as most indicator readings. Two traders will interpret the same price action as differently as they might indicator data.\n\nIt probably sounds like jumping from one frying pan (using indicators) into another (using price action). But there is no holy grail when it comes to analyzing and trading the markets. Instead, it’s best to find an approach that resonates with your trading personality, your way of thinking, your goals, and your risk tolerance.\n\n## The bottom line\nAs with all technical trading approaches, price action analysis is a blend of art and science. It isn’t for everyone. But if it resonates with the way you prefer to analyze and trade markets, then perhaps this discipline is worth a try.\n\nYou can also create a hybrid or custom approach that focuses on price action, but also includes a few [technical](https:\/\/www.britannica.com\/money\/what-is-technical-analysis) or [fundamental](https:\/\/www.britannica.com\/money\/what-is-fundamental-analysis) indicators. Again, reading the charts is a blend of art and science.","meta_canonical":null}

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Boilerpipe Text	Open full sized image Are you focused on the map or the landscape? © yossarian6/stock.adobe.com They say the map is not the territory. That might sound like a no-brainer. Yet, we’re all prone to occasionally fixating on a map such that we miss the landscape right in front of us. In the financial markets, technical indicators are like maps. They can give shape to a dynamic market environment, making price movements clearer to see and easier to interpret. But on the flip side, indicators can also oversimplify or even blot out the very thing they’re trying to analyze: the price action itself. Price action trading focuses almost solely on the movement of price over time. Traders who follow price action may use minimal technical indicators or avoid them altogether. Price action analysis focuses on trends, chart patterns, and significant historical price events and movements. And that’s why some traders prefer to ditch the proverbial map by chucking most or all indicators, opting for a more minimalist approach. This is what price action trading is all about: working directly with an asset’s price and price history to analyze and anticipate its potential direction. What is price action trading? Price action refers to the characteristics of an asset’s price movements over time. These price movements are often plotted on a chart and displayed without supplemental technical indicators (except maybe volume). Although such bare charts may, at first, seem a little too minimal to provide much information, focusing on price alone can help uncover nuanced movements that might be difficult to detect via an indicator. Price action trading is a method of financial analysis and speculation that generates its insights and actions solely from the interpretation of price movements. William Blake suggested we can “see a world in a grain of sand.” In this case, it’s about observing the movement of price—from small grains to large gaps—to see what it might indicate in terms of future shape and direction. Why eliminate or minimize indicators? Indicators were designed to emphasize certain technical aspects of the markets (including volume, trend, momentum, and so on). But in doing so, they exclude other technical aspects. This is why traders often combine indicators—to compensate for gaps in technical perspective. For all the insights indicators may provide, they invariably produce blind spots: Lagging indicators that trail behind current prices (such as moving averages) can sometimes divert attention away from market conditions taking shape in the present. Indicators designed for specific functions can obscure other important details. Multiple indicators can overcomplicate market scenarios, sometimes yielding conflicting readings that can lead to the dreaded “analysis paralysis.” The quantity of indicators doesn’t always correlate to the quality or adequacy of market information. Analyzing price action If you plan to analyze or trade markets based solely on current and historical prices, you’re likely to focus on three things: trends, chart patterns, and significant technical events. Trends. In general, an uptrend is defined by higher highs and higher lows (see figure 1), while a downtrend consists of lower lows and lower highs. So, is a stock trending up, down, or sideways? Some traders draw simple trendlines to identify these movements. Other traders might use a formula to detect trends. Chart patterns. The chart pattern universe is extensive. There are classic chart patterns, such as the symmetrical triangle (see figure 1). You can also study a smaller range of sessions by analyzing groups of bars, such as the bullish engulfing candlestick pattern (figure 1). Open full sized image Figure 1: WATCHING THE PRICE ACTION. Simple patterns and single-period movements can sometimes help you see the big picture. Image source: StockCharts.com. Annotations by Encyclopædia Britannica, Inc. Technical events. Prices may move according to or against expectations at a critical technical juncture, such as near a support and resistance level, trendline, or major pattern. For price action traders, these events and their outcomes are important. They’re historical reference points that help guide future trading setups and decisions. Price floors and ceilings Need a refresher on support, resistance, and spotting price trends? This is the place. Advantages and limitations of using price action A price action approach allows you to view price charts without clutter or extra biases generated by indicators. Ultimately, this allows you to interpret prices directly instead of interpreting an interpretation. The big limitation is that price action readings can be just as subjective and variable as most indicator readings. Two traders will interpret the same price action as differently as they might indicator data. It probably sounds like jumping from one frying pan (using indicators) into another (using price action). But there is no holy grail when it comes to analyzing and trading the markets. Instead, it’s best to find an approach that resonates with your trading personality, your way of thinking, your goals, and your risk tolerance. The bottom line As with all technical trading approaches, price action analysis is a blend of art and science. It isn’t for everyone. But if it resonates with the way you prefer to analyze and trade markets, then perhaps this discipline is worth a try. You can also create a hybrid or custom approach that focuses on price action, but also includes a few technical or fundamental indicators. Again, reading the charts is a blend of art and science.
Markdown	[History & Society](https://www.britannica.com/History-Society)[Science & Tech](https://www.britannica.com/Science-Tech)[Biographies](https://www.britannica.com/Biographies)[Animals & Nature](https://www.britannica.com/Animals-Nature)[Geography & Travel](https://www.britannica.com/Geography-Travel)[Arts & Culture](https://www.britannica.com/Arts-Culture)[ProCon](https://www.britannica.com/procon)[Games & Quizzes](https://www.britannica.com/quiz/browse)[Videos](https://www.britannica.com/videos)[On This Day](https://www.britannica.com/on-this-day)[One Good Fact](https://www.britannica.com/one-good-fact)[Dictionary](https://www.britannica.com/dictionary) - [Lifestyles & Social Issues](https://www.britannica.com/browse/Lifestyles-Social-Issues) - [Philosophy & Religion](https://www.britannica.com/browse/Philosophy-Religion) - [Politics, Law & Government](https://www.britannica.com/browse/Politics-Law-Government) - [World History](https://www.britannica.com/browse/World-History) - [Health & Medicine](https://www.britannica.com/browse/Health-Medicine) - [Science](https://www.britannica.com/browse/Science) - [Technology](https://www.britannica.com/browse/Technology) - [Browse Biographies](https://www.britannica.com/browse/biographies) - [Birds, Reptiles & Other Vertebrates](https://www.britannica.com/browse/Birds-Reptiles-Vertebrates) - [Environment](https://www.britannica.com/browse/Environment) - [Fossils & Geologic Time](https://www.britannica.com/browse/Fossil-Geologic-Time) - [Insects & Other Invertebrates](https://www.britannica.com/browse/Bugs-Mollusks-Invertebrates) - [Mammals](https://www.britannica.com/browse/Mammals) - [Plants](https://www.britannica.com/browse/Plants) - [Geography & Travel](https://www.britannica.com/browse/Geography-Travel) - [Entertainment & Pop Culture](https://www.britannica.com/browse/Entertainment-Pop-Culture) - [Literature](https://www.britannica.com/browse/Literature) - [Sports & Recreation](https://www.britannica.com/browse/Sports-Recreation) - [Visual Arts](https://www.britannica.com/browse/Visual-Arts) [Image Galleries](https://www.britannica.com/gallery/browse)[Podcasts](https://www.britannica.com/podcasts)[Summaries](https://www.britannica.com/summary)[Top Questions](https://www.britannica.com/question)[Britannica Kids](https://kids.britannica.com/) [![Britannica Money](https://cdn.britannica.com/money/assets/MoneyLogo-30x236-2x.png)](https://www.britannica.com/money) [Household Finance](https://www.britannica.com/money/browse/household-finance) [Investing](https://www.britannica.com/money/browse/investing) [Trading](https://www.britannica.com/money/browse/Trading) [Retirement](https://www.britannica.com/money/browse/retirement) [Companies](https://www.britannica.com/money/browse/Companies) [Biographies](https://www.britannica.com/money/browse/Biographies) [Finance & the Economy](https://www.britannica.com/money/browse/history-and-theory) Table of Contents * - [Introduction](https://www.britannica.com/money/bollinger-bands-indicator#ref2234838-1) - [The mechanics of Bollinger Bands](https://www.britannica.com/money/bollinger-bands-indicator#ref358294) - [Comparing Bollinger Bands with other indicators](https://www.britannica.com/money/bollinger-bands-indicator#ref358295) - [Using Bollinger Bands in a trading strategy](https://www.britannica.com/money/bollinger-bands-indicator#ref358296) - [The bottom line](https://www.britannica.com/money/bollinger-bands-indicator#ref358297) - [References](https://www.britannica.com/money/bollinger-bands-indicator#ref2234838-references) Read More [![A dollar bill folded into a paper crane appears next to the words "Stocks vs. Bonds."](https://cdn.britannica.com/53/272153-138-C51607E2/basic-investment-types-stocks-bonds.jpg?c=crop&h=40&w=50) stock](https://www.britannica.com/money/stock-finance) [![Man in a black suit and tie surfing on a blue surfboard in front of a large ocean wave.](https://cdn.britannica.com/86/273386-159-3B08D3B4/Trend-Following-photo-illustration-image-Businessman-surfing.jpg?c=crop&h=40&w=50) Trend following: A time-tested strategy for riding market momentum](https://www.britannica.com/money/trend-following-trading-strategy) [![VWAP, photo illustration image: Volatile vs. stable charts balanced on scale.](https://cdn.britannica.com/23/271623-159-D3A8C2A6/VWAP-photo-illustration-image-Volatile-vs-stable-charts-balanced-on-scale.jpg?c=crop&h=40&w=50) Volume-weighted average price (VWAP): A versatile technical indicator for pros and day traders](https://www.britannica.com/money/volume-weighted-average-price) Table Of Contents [Trading](https://www.britannica.com/money/browse/Trading) [Technical Analysis](https://www.britannica.com/money/browse/Technical-Analysis) # Bollinger Bands: A powerful technical tool for traders Dual insights from a single indicator. Print Cite Share Written by*Brian Lund [Brian Lund](https://www.britannica.com/money/author/brian-lund/12930358) Brian Lund is a Southern California–based fintech executive, author, and trader with over 35 years of market experience. He has been a frequent guest on CNBC and his articles have appeared in the Wall Street Journal, Yahoo! Finance, CNN, Traders World* magazine, AOL’s Daily Finance, and other domestic and international outlets. Fact-checked byKarl Montevirgen [Karl Montevirgen](https://www.britannica.com/money/author/karl-montevirgen/12874516) Karl Montevirgen is a professional freelance writer who specializes in the fields of finance, cryptomarkets, content strategy, and the arts. Karl works with several organizations in the equities, futures, physical metals, and blockchain industries. He holds FINRA Series 3 and Series 34 licenses in addition to a dual MFA in critical studies/writing and music composition from the California Institute of the Arts. Table of Contents * - [Introduction](https://www.britannica.com/money/bollinger-bands-indicator#ref2234838-1) - [The mechanics of Bollinger Bands](https://www.britannica.com/money/bollinger-bands-indicator#ref358294) - [Comparing Bollinger Bands with other indicators](https://www.britannica.com/money/bollinger-bands-indicator#ref358295) - [Using Bollinger Bands in a trading strategy](https://www.britannica.com/money/bollinger-bands-indicator#ref358296) - [The bottom line](https://www.britannica.com/money/bollinger-bands-indicator#ref358297) - [References](https://www.britannica.com/money/bollinger-bands-indicator#ref2234838-references) Read More [![A dollar bill folded into a paper crane appears next to the words "Stocks vs. Bonds."](https://cdn.britannica.com/53/272153-138-C51607E2/basic-investment-types-stocks-bonds.jpg?c=crop&h=40&w=50) stock](https://www.britannica.com/money/stock-finance) [![Man in a black suit and tie surfing on a blue surfboard in front of a large ocean wave.](https://cdn.britannica.com/86/273386-159-3B08D3B4/Trend-Following-photo-illustration-image-Businessman-surfing.jpg?c=crop&h=40&w=50) Trend following: A time-tested strategy for riding market momentum](https://www.britannica.com/money/trend-following-trading-strategy) [![VWAP, photo illustration image: Volatile vs. stable charts balanced on scale.](https://cdn.britannica.com/23/271623-159-D3A8C2A6/VWAP-photo-illustration-image-Volatile-vs-stable-charts-balanced-on-scale.jpg?c=crop&h=40&w=50) Volume-weighted average price (VWAP): A versatile technical indicator for pros and day traders](https://www.britannica.com/money/volume-weighted-average-price) Table Of Contents ![Bollinger Bands plotted on a price chart.](https://cdn.britannica.com/53/246253-050-9475C22D/bollinger-bands.jpg?w=385) Open full sized image Watch price trends plus volatility. Source: StockCharts.com. Annotations by Encyclopædia Britannica, Inc. Bollinger Bands are a popular [technical analysis](https://www.britannica.com/money/what-is-technical-analysis) tool used by stock market traders to assess price volatility and identify potential buy or sell signals. Developed in the early 1980s by John Bollinger, a renowned trader and Chartered Market Technician (CMT), Bollinger Bands provide insights into market conditions by combining the concepts of a moving average and a volatility measure in one indicator. According to Bollinger, his namesake indicator is not just for stocks, but can also be used for [futures](https://www.britannica.com/money/what-is-a-futures-contract), [commodities](https://www.britannica.com/money/what-are-commodities), and [currency trading](https://www.britannica.com/money/retail-forex-trading). In addition, Bollinger Bands are time frame agnostic, meaning they apply to all time period charts. ## Key Points - Bollinger Bands track both market volatility and directional trends. - The indicator consists of a simple moving average and an upper and lower band representing standard deviations from the moving average. - Bollinger Bands can be used on any actively traded financial asset and across multiple time frames. ## The mechanics of Bollinger Bands Bollinger Bands combine a simple moving average (SMA) and a measure of price volatility via standard deviations (SD). The calculation of Bollinger Bands involves three main components: - Simple moving average. The SMA is calculated by summing up a certain number of closing prices and dividing the result by the chosen period. For example, a 20-day SMA adds up the closing prices of the past 20 trading days and divides the total by 20. - Standard deviation. The standard deviation measures how spread out prices are from the average. It quantifies the volatility of the price series. The standard deviation is usually calculated using the same period as the SMA. - Upper and lower bands. Bollinger Bands are typically constructed by adding and subtracting a certain number of standard deviations (usually two) from the SMA. This creates an upper band and a lower band that envelop the price series, forming a channel that expands and contracts as volatility increases and decreases. Here’s the formula for calculating Bollinger Bands (at two standard deviations) based on a 20-day simple moving average: - Upper band = 20-day SMA + (20-day SD x 2) - Middle band = 20-day SMA - Lower band = 20-day SMA – (20-day SD x 2) ![Bollinger Bands plotted on a price chart.](https://cdn.britannica.com/53/246253-050-9475C22D/bollinger-bands.jpg?w=800) Open full sized image Figure 1: TRADING BAND-AID? Shares of electric vehicle maker Tesla** (TSLA) were among the most volatile stocks in the S\&P 500 Index (SPX) in 2022 and 2023. Note the wide upper and lower Bollinger Bands (solid purple lines) around the moving average (dotted purple line). For educational purposes only. Source: StockCharts.com. Annotations by Encyclopædia Britannica, Inc. ## Comparing Bollinger Bands with other indicators Some [technical indicators](https://www.britannica.com/money/technical-indicator-types) attempt to measure volatility, like average true range (ATR), standard deviations, or the CBOE Volatility Index (VIX). Others are designed to identify trends, such as [moving averages](https://www.britannica.com/money/what-are-moving-averages), parabolic SAR, and average directional index (ADX). Bollinger Bands are unique in that they comprise both a moving average and standard deviations. By combining these two elements, Bollinger Bands capture both the trend (through the moving average) and volatility (through the standard deviations). This makes them particularly useful for identifying periods of high or low volatility and potential price reversals. Because Bollinger Bands are a particularly visual technical indicator, those dynamic changes in [volatility](https://www.britannica.com/money/stock-market-volatility) are easy to see on a price chart, especially at the extremes. Some traders incorporate these visual cues into their strategies by analyzing band width—as well as where price is in relation to the bands—and then combining this analysis with other indicators. ## Using Bollinger Bands in a trading strategy Bollinger Bands can help traders identify overbought and oversold conditions based on the concept of mean reversion, which suggests that, over time, an asset will tend to converge on its average or mean price. When price is trading near the upper band, it indicates that a stock is overbought and may be due for a price correction. When the price is near the lower band, it suggests that the stock is oversold and may be ripe for a rebound. This can provide a strategy for range-bound markets, with the trader going long when price touches the lower band and short when it touches the top band. However, when a stock is moving in a strong trend, these signals may not work as well. Trending prices can continue to “walk” along the upper or lower bands for an extended time. One way traders can adapt a Bollinger Bands strategy in a trending market is by identifying the direction of the trend and then taking only corresponding trades. For example, if the trend is up, a trader would buy when price touches the bottom band, but would not short when price touches the top band. Instead, they might use the next touch of the (rising) lower band to add to their position. ## The bottom line Bollinger Bands can be a powerful technical tool for stock market traders. By combining a moving average with a measure of price volatility, Bollinger Bands offer insights into potential price reversals, overbought or oversold conditions, and market volatility. Remember that no single indicator can guarantee successful trading outcomes. Traders should always exercise caution and conduct [thorough analysis](https://www.britannica.com/money/what-is-due-diligence) before making investment decisions. This article is intended for educational purposes only and not as an endorsement of a particular financial strategy. Encyclopædia Britannica, Inc., does not provide legal, tax, or investment advice. ## References - [Bollinger Bands](https://www.bollingerbands.com/) \\| bollingerbands.com - [What Are Bollinger Bands?](https://school.stockcharts.com/doku.php?id=technical_indicators:bollinger_bands) \\| school.stockcharts.com Table of Contents * - [Introduction](https://www.britannica.com/money/price-action-trading-explained#ref2234894-1) - [What is price action trading?](https://www.britannica.com/money/price-action-trading-explained#ref354673) - [Why eliminate or minimize indicators?](https://www.britannica.com/money/price-action-trading-explained#ref354674) - [Analyzing price action](https://www.britannica.com/money/price-action-trading-explained#ref354675) - [Advantages and limitations of using price action](https://www.britannica.com/money/price-action-trading-explained#ref354676) - [The bottom line](https://www.britannica.com/money/price-action-trading-explained#ref354677) Read More [![Man in a black suit and tie surfing on a blue surfboard in front of a large ocean wave.](https://cdn.britannica.com/86/273386-159-3B08D3B4/Trend-Following-photo-illustration-image-Businessman-surfing.jpg?c=crop&h=40&w=50) Trend following: A time-tested strategy for riding market momentum](https://www.britannica.com/money/trend-following-trading-strategy) [![VWAP, photo illustration image: Volatile vs. stable charts balanced on scale.](https://cdn.britannica.com/23/271623-159-D3A8C2A6/VWAP-photo-illustration-image-Volatile-vs-stable-charts-balanced-on-scale.jpg?c=crop&h=40&w=50) Volume-weighted average price (VWAP): A versatile technical indicator for pros and day traders](https://www.britannica.com/money/volume-weighted-average-price) [![A price chart shows a stock in an uptrend and two moving averages.](https://cdn.britannica.com/64/270764-050-D279079F/smas-and-the-long-trend.jpg?c=crop&h=40&w=50) Simple moving average vs. exponential moving average](https://www.britannica.com/money/simple-vs-exponential-moving-averages) Table Of Contents [Trading](https://www.britannica.com/money/browse/Trading) [Technical Analysis](https://www.britannica.com/money/browse/Technical-Analysis) # Trading with price action analysis Explore price territory without a map. Print Cite Share Written byKarl Montevirgen [Karl Montevirgen](https://www.britannica.com/money/author/karl-montevirgen/12874516) Karl Montevirgen is a professional freelance writer who specializes in the fields of finance, cryptomarkets, content strategy, and the arts. Karl works with several organizations in the equities, futures, physical metals, and blockchain industries. He holds FINRA Series 3 and Series 34 licenses in addition to a dual MFA in critical studies/writing and music composition from the California Institute of the Arts. Fact-checked byDoug Ashburn [Doug Ashburn](https://www.britannica.com/money/author/douglas-ashburn/12849777) Doug is a Chartered Alternative Investment Analyst who spent more than 20 years as a derivatives market maker and asset manager before “reincarnating” as a financial media professional a decade ago. Table of Contents * - [Introduction](https://www.britannica.com/money/price-action-trading-explained#ref2234894-1) - [What is price action trading?](https://www.britannica.com/money/price-action-trading-explained#ref354673) - [Why eliminate or minimize indicators?](https://www.britannica.com/money/price-action-trading-explained#ref354674) - [Analyzing price action](https://www.britannica.com/money/price-action-trading-explained#ref354675) - [Advantages and limitations of using price action](https://www.britannica.com/money/price-action-trading-explained#ref354676) - [The bottom line](https://www.britannica.com/money/price-action-trading-explained#ref354677) Read More [![Man in a black suit and tie surfing on a blue surfboard in front of a large ocean wave.](https://cdn.britannica.com/86/273386-159-3B08D3B4/Trend-Following-photo-illustration-image-Businessman-surfing.jpg?c=crop&h=40&w=50) Trend following: A time-tested strategy for riding market momentum](https://www.britannica.com/money/trend-following-trading-strategy) [![VWAP, photo illustration image: Volatile vs. stable charts balanced on scale.](https://cdn.britannica.com/23/271623-159-D3A8C2A6/VWAP-photo-illustration-image-Volatile-vs-stable-charts-balanced-on-scale.jpg?c=crop&h=40&w=50) Volume-weighted average price (VWAP): A versatile technical indicator for pros and day traders](https://www.britannica.com/money/volume-weighted-average-price) [![A price chart shows a stock in an uptrend and two moving averages.](https://cdn.britannica.com/64/270764-050-D279079F/smas-and-the-long-trend.jpg?c=crop&h=40&w=50) Simple moving average vs. exponential moving average](https://www.britannica.com/money/simple-vs-exponential-moving-averages) Table Of Contents ![Photo of a woman standing in front of a landscape and checking a map.](https://cdn.britannica.com/03/239803-050-B9EFDDF3/Travel-woman-with-backpack-checks-map.jpg?w=385) Open full sized image Are you focused on the map or the landscape? © yossarian6/stock.adobe.com They say the map is not the territory. That might sound like a no-brainer. Yet, we’re all prone to occasionally fixating on a map such that we miss the landscape right in front of us. In the financial markets, [technical indicators](https://www.britannica.com/money/what-is-technical-analysis) are like maps. They can give shape to a dynamic market environment, making price movements clearer to see and easier to interpret. But on the flip side, indicators can also oversimplify or even blot out the very thing they’re trying to analyze: the price action itself. ## - Price action trading focuses almost solely on the movement of price over time. - Traders who follow price action may use minimal technical indicators or avoid them altogether. - Price action analysis focuses on trends, chart patterns, and significant historical price events and movements. And that’s why some traders prefer to ditch the proverbial map by chucking most or all indicators, opting for a more minimalist approach. This is what price action trading is all about: working directly with an asset’s price and price history to analyze and anticipate its potential direction. ## What is price action trading? Price action refers to the characteristics of an asset’s price movements over time. These price movements are often plotted on a chart and displayed without supplemental technical indicators (except maybe volume). Although such bare charts may, at first, seem a little too minimal to provide much information, focusing on price alone can help uncover nuanced movements that might be difficult to detect via an indicator. Price action trading is a method of [financial analysis](https://www.britannica.com/money/how-to-analyze-a-stock) and speculation that generates its insights and actions solely from the interpretation of price movements. William Blake suggested we can “see a world in a grain of sand.” In this case, it’s about observing the movement of price—from small grains to large gaps—to see what it might indicate in terms of future shape and direction. ## Why eliminate or minimize indicators? Indicators were designed to emphasize certain technical aspects of the markets (including volume, trend, momentum, and so on). But in doing so, they exclude other technical aspects. This is why traders often combine indicators—to compensate for gaps in technical perspective. For all the insights indicators may provide, they invariably produce blind spots: - Lagging indicators that trail behind current prices (such as moving averages) can sometimes divert attention away from market conditions taking shape in the present. - Indicators designed for specific functions can obscure other important details. - Multiple indicators can overcomplicate market scenarios, sometimes yielding conflicting readings that can lead to the dreaded “analysis paralysis.” - The quantity of indicators doesn’t always correlate to the quality or adequacy of market information. ## Analyzing price action If you plan to analyze or trade markets based solely on current and historical prices, you’re likely to focus on three things: trends, chart patterns, and significant technical events. Trends. In general, an uptrend is defined by higher highs and higher lows (see figure 1), while a downtrend consists of lower lows and lower highs. So, is a stock trending up, down, or sideways? Some traders draw simple trendlines to identify these movements. Other traders might use a formula to detect trends. Chart patterns. The chart pattern universe is extensive. There are classic chart patterns, such as the symmetrical triangle (see figure 1). You can also study a smaller range of sessions by analyzing groups of bars, such as the bullish engulfing candlestick pattern (figure 1). ![Watching the price action](https://cdn.britannica.com/36/240236-050-D6D4520F/watching-the-price-action.jpg?w=800) Open full sized image Figure 1: WATCHING THE PRICE ACTION. Simple patterns and single-period movements can sometimes help you see the big picture. Image source: StockCharts.com. Annotations by Encyclopædia Britannica, Inc. Technical events. Prices may move according to or against expectations at a critical technical juncture, such as near a support and resistance level, trendline, or major pattern. For price action traders, these events and their outcomes are important. They’re historical reference points that help guide future trading setups and decisions. ## Price floors and ceilings Need a refresher on support, resistance, and spotting price trends? [This is the place.](https://www.britannica.com/money/what-are-support-resistance) ## Advantages and limitations of using price action A price action approach allows you to view price charts without clutter or extra biases generated by indicators. Ultimately, this allows you to interpret prices directly instead of interpreting an interpretation. The big limitation is that price action readings can be just as subjective and variable as most indicator readings. Two traders will interpret the same price action as differently as they might indicator data. It probably sounds like jumping from one frying pan (using indicators) into another (using price action). But there is no holy grail when it comes to analyzing and trading the markets. Instead, it’s best to find an approach that resonates with your trading personality, your way of thinking, your goals, and your risk tolerance. ## The bottom line As with all technical trading approaches, price action analysis is a blend of art and science. It isn’t for everyone. But if it resonates with the way you prefer to analyze and trade markets, then perhaps this discipline is worth a try. You can also create a hybrid or custom approach that focuses on price action, but also includes a few [technical](https://www.britannica.com/money/what-is-technical-analysis) or [fundamental](https://www.britannica.com/money/what-is-fundamental-analysis) indicators. Again, reading the charts is a blend of art and science. [![Britannica Money Logo](https://cdn.britannica.com/money/assets/Money-475x60-footer-2x.png?h=47&w=390)](https://www.britannica.com/money) [About Us](https://www.britannica.com/money/about)[Privacy Policy](https://corporate.britannica.com/privacy-policy-2)[Terms & Conditions](https://corporate.britannica.com/termsofuse.html) © 2026 Encyclopædia Britannica, Inc.
Readable Markdown	![Photo of a woman standing in front of a landscape and checking a map.](https://cdn.britannica.com/03/239803-050-B9EFDDF3/Travel-woman-with-backpack-checks-map.jpg?w=385) Open full sized image Are you focused on the map or the landscape? © yossarian6/stock.adobe.com They say the map is not the territory. That might sound like a no-brainer. Yet, we’re all prone to occasionally fixating on a map such that we miss the landscape right in front of us. In the financial markets, [technical indicators](https://www.britannica.com/money/what-is-technical-analysis) are like maps. They can give shape to a dynamic market environment, making price movements clearer to see and easier to interpret. But on the flip side, indicators can also oversimplify or even blot out the very thing they’re trying to analyze: the price action itself. - Price action trading focuses almost solely on the movement of price over time. - Traders who follow price action may use minimal technical indicators or avoid them altogether. - Price action analysis focuses on trends, chart patterns, and significant historical price events and movements. And that’s why some traders prefer to ditch the proverbial map by chucking most or all indicators, opting for a more minimalist approach. This is what price action trading is all about: working directly with an asset’s price and price history to analyze and anticipate its potential direction. ## What is price action trading? Price action refers to the characteristics of an asset’s price movements over time. These price movements are often plotted on a chart and displayed without supplemental technical indicators (except maybe volume). Although such bare charts may, at first, seem a little too minimal to provide much information, focusing on price alone can help uncover nuanced movements that might be difficult to detect via an indicator. Price action trading is a method of [financial analysis](https://www.britannica.com/money/how-to-analyze-a-stock) and speculation that generates its insights and actions solely from the interpretation of price movements. William Blake suggested we can “see a world in a grain of sand.” In this case, it’s about observing the movement of price—from small grains to large gaps—to see what it might indicate in terms of future shape and direction. ## Why eliminate or minimize indicators? Indicators were designed to emphasize certain technical aspects of the markets (including volume, trend, momentum, and so on). But in doing so, they exclude other technical aspects. This is why traders often combine indicators—to compensate for gaps in technical perspective. For all the insights indicators may provide, they invariably produce blind spots: - Lagging indicators that trail behind current prices (such as moving averages) can sometimes divert attention away from market conditions taking shape in the present. - Indicators designed for specific functions can obscure other important details. - Multiple indicators can overcomplicate market scenarios, sometimes yielding conflicting readings that can lead to the dreaded “analysis paralysis.” - The quantity of indicators doesn’t always correlate to the quality or adequacy of market information. ## Analyzing price action If you plan to analyze or trade markets based solely on current and historical prices, you’re likely to focus on three things: trends, chart patterns, and significant technical events. Trends. In general, an uptrend is defined by higher highs and higher lows (see figure 1), while a downtrend consists of lower lows and lower highs. So, is a stock trending up, down, or sideways? Some traders draw simple trendlines to identify these movements. Other traders might use a formula to detect trends. Chart patterns. The chart pattern universe is extensive. There are classic chart patterns, such as the symmetrical triangle (see figure 1). You can also study a smaller range of sessions by analyzing groups of bars, such as the bullish engulfing candlestick pattern (figure 1). ![Watching the price action](https://cdn.britannica.com/36/240236-050-D6D4520F/watching-the-price-action.jpg?w=800) Open full sized image Figure 1: WATCHING THE PRICE ACTION. Simple patterns and single-period movements can sometimes help you see the big picture. Image source: StockCharts.com. Annotations by Encyclopædia Britannica, Inc. Technical events. Prices may move according to or against expectations at a critical technical juncture, such as near a support and resistance level, trendline, or major pattern. For price action traders, these events and their outcomes are important. They’re historical reference points that help guide future trading setups and decisions. ## Price floors and ceilings Need a refresher on support, resistance, and spotting price trends? [This is the place.](https://www.britannica.com/money/what-are-support-resistance) ## Advantages and limitations of using price action A price action approach allows you to view price charts without clutter or extra biases generated by indicators. Ultimately, this allows you to interpret prices directly instead of interpreting an interpretation. The big limitation is that price action readings can be just as subjective and variable as most indicator readings. Two traders will interpret the same price action as differently as they might indicator data. It probably sounds like jumping from one frying pan (using indicators) into another (using price action). But there is no holy grail when it comes to analyzing and trading the markets. Instead, it’s best to find an approach that resonates with your trading personality, your way of thinking, your goals, and your risk tolerance. ## The bottom line As with all technical trading approaches, price action analysis is a blend of art and science. It isn’t for everyone. But if it resonates with the way you prefer to analyze and trade markets, then perhaps this discipline is worth a try. You can also create a hybrid or custom approach that focuses on price action, but also includes a few [technical](https://www.britannica.com/money/what-is-technical-analysis) or [fundamental](https://www.britannica.com/money/what-is-fundamental-analysis) indicators. Again, reading the charts is a blend of art and science.
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