A Bollinger Band is a technical analysis tool that consists of a set of lines plotted two standard deviations (usually) away from a simple moving average of a cryptocurrency’s price. The Bollinger Band Squeeze refers to a period of low volatility when the bands contract and move closer together. This typically indicates that a breakout or significant price movement may be imminent.
During a Bollinger Band Squeeze, traders often anticipate a sharp increase in volatility and potential price movement. This can present opportunities for traders to enter positions based on the expected breakout direction.
The squeeze is created when the bands contract due to decreased volatility in the cryptocurrency’s price action. As the bands squeeze closer together, it suggests that a breakout may occur as prices tend to move in a trending direction after periods of low volatility.
Overall, the Bollinger Band Squeeze is a technical indicator used by traders to anticipate potential price movements in cryptocurrency markets based on periods of low volatility.
