Bollinger Bands for Crptocurrency Technical Analysis

Much like the Relative Strength Index (RSI), Bollinger Bands are an indicator that can help you get a sense of the stability of an asset at a given moment.  When Bollinger Bands are plotted onto a chart, it will show you the 20 day moving average and two lines measuring standard deviation above and below the moving average.  You can make changes to the formula, but this is the traditional setup for Bollinger Bands.  The bands are placed around the moving average to measure volatility.  When there’s high volatility in a certain asset the bands will be widened, and when there is low volatility the bands get more and more narrow.  Like the RSI, people use Bollinger Bands to determine good entry and exit points when trading.  When a chart is starting to hit the top band, it is seen as a good time to sell because the asset is probably being overbought; and when it’s starting to hit the bottom band, it is a good time to buy because the asset is most likely oversold and is about to go back up.

Recently, we at Quantify Crypto have made some updates to our website that show multiple indicators for technical analysis on each coin’s page.  Here is where we display Bollinger Bands for a specific coin in multiple time intervals.  The orange means the price is inside the two bands, the red meaning it’s below the bottom band, and the green meaning it’s above the top band.

Our backtesting at Quantify Crypto indicates when a bollinger band reaches the green territory, specifically in the shorter time intervals (5-30 minutes), that is a bullish sign for cryptocurrency.  These intervals being in the green will typically lead to a run up in price. 

Indicators like Bollinger Bands are a great way to help you trade.  Knowing the general volatility of a stock or coin is essential.  Incorporating technical indicators into your decision making process will help you become a better trader.

The platform Quantify Crypto provides live cryptocurrency prices, technical analysis, news, heatmaps and more. Our flagship product is the trend algorithm, designed to be on the correct side of significant cryptocurrency price moves. We are a new site, please check us out and let us know what you like and do not like about the site.

None of this is meant to be financial advice and I do not have any financial expertise.

Alex Wason is an intern working for QuantifyCrypto.