and other financial markets to evaluate price volatility, pinpoint probable reversal points, and make trading decisions.The upper band is created by multiplying the middle band by the price’s standard deviation. A price’s volatility is quantified by the standard deviation. Traders often use a multiplier of 2 for the standard deviation , but this can be changed depending on the state of the market and personal preferences.
On the other hand, if the price touches or swings outside the lower band, it can be a sign that the market is oversold, presenting a potential buying opportunity. The bands’ breadth provides information on market volatility; broader bands denote higher volatility, while narrower bands denote lesser volatility.
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