The bollinger band is a technical indicator created by John Bollinger, a technical analysis expert. Bollinger bands are used to measure the volatility of an asset by narrowing or widening the upper or lower bollinger bands. This technical indicator has three elements: the SMA 20 line in the middle, the upper, and the lower band.
The bollinger band indicator can be used to obtain certain information from price trends. Squeeze is a situation where the upper and lower limits of the bollinger band narrow. This pattern signals a decrease in price volatility. A squeeze will be followed by widening both upper and lower bands, which usually indicates an uptrend or downtrend.
However, bollinger bands are only able to see signs of changing trends. This indicator is unable to show which way the direction will move. John Bollinger said that his indicators should be combined with other technical ones. According to him, bollinger bands only provide a small picture. In order to give a big picture, it is better to combine it with indicators that show trading volumes, such as MACD, RSI, and OBV.
Besides bollinger band, here is another technical indicator that can be used for crypto trading.