| Upward middle band |
Indicates an uptrend |
Buy or hold long positions |
| Downward middle band |
Suggests a downtrend |
Sell or hold short positions |
| Narrow bands (squeeze) |
Less volatility; potential for significant price move |
Prepare for a breakout; consider entry points |
| Price touching or moving outside the upper band |
Potentially overbought (poised to fall in price) |
Consider selling, shorting, or tightening stop-loss orders |
| Price touching or falling outside the lower band |
Potentially oversold (poised to go up) |
Buying or tightening stop-loss orders |
| Price bounces off the lower band |
The upper band becomes a potential exit point if the trend… |
