The earlier Bollinger lesson explained the envelope. This one reads it the way the course does: on the weekly and daily, looking at closes, not wicks.
Three lines, three jobs
- Upper band: where a strong move stretches to. A weekly close above it has, in past cycles, often been continuation rather than exhaustion.
- Lower band: the mirror. A close below can be exhaustion or continuation down; the surrounding structure decides which.
- Middle band: a 20-bar SMA. Useful as a bounce line in a trend, but the course keeps its eyes on the outer bands.
Expansion and contraction
Bands squeeze when volatility falls and widen when it rises. A long squeeze has often preceded a large move, in either direction. Wide bands after a big move often precede consolidation. The lesson chart lets you change the length and the standard-deviation multiplier in the Indicators panel; the course keeps the defaults.
The Indicator Dashboard on the Technical Analysis page has a Squeeze card that measures exactly this contraction live, so you do not have to eyeball it.
Reading closes outside the band
On the weekly, a candle that closes above the upper band is the course's continuation signal. A wick above that closes back inside is not. On the daily, the same reading is lighter. The author's historical example is a weekly upper band near 57,750 dollars during a past Bitcoin rally, where the close above it preceded further upside; that is a dated example, not a level that matters today.
Alerts
The course sets an alert when price crosses a band. This platform has no Bollinger-band alert rule. Use a price-cross alert at the band's current level and move it when the band moves, or a scanner hit alert on a preset that filters for the stretch you want.
In the lab
Step through 1M, 1W and 1D with the bands and the three simple averages on. Note each weekly close outside the bands in the last two years and what the 8 and 55 were doing at the time. Then open the Indicator Dashboard and compare its Squeeze reading with what your eyes say.