Vogaz - Bollinger Bands

Bollinger Bands are similar in comparison to moving average envelopes. Bollinger Bands are calculated using standard deviations instead of shifting bands by a fixed percentage. Bollinger Bands (as with most bands) can be imposed over an actual price or another indicator. When prices rise above the upper band or fall below the lower band, a change in direction may occur when the price penetrates the band after a small reversal from the opposite direction. Bollinger Bands are lines plotted in and around the price structure to form an "envelope." It is the action of prices near the edges of the envelope. Bollinger Bands are based upon a simple moving average.
Bollinger recommends using a 20-period simple moving average for the center band and 2 standard deviations for the outer bands. The length of the moving average and number of deviations can be adjusted to better suit individual preferences and specific characteristics of an instrument.
Bollinger Bands is a  indicator that allow comparing volatility and relative price levels over a period. It can be combined with price action to generate signals and foreshadow significant moves.
It serves many functions-
• To identify periods of high and low volatility
• To identify periods when prices are at extreme, and possibly unsustainable, levels.
• To arrive at rigorous buy and sell decisions.