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Bollinger Bands

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Financial Dictionary

Bollinger Bands

The outer limits of the market's price variations that are used by technical analysts to determine if the market is overbought or oversold. The bands are plotted two standard deviations on each side of the moving average. The closer the market average moves to the lower band, the more oversold the market. Conversely, the closer the average to the upper band, the more overbought the market.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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