Bollinger Bands

Bollinger Bands are a simple charting tool: a moving average in the middle, with an upper and lower band that widen and narrow based on how volatile the stock has recently been. A stock trading near or below its lower band has moved further from its recent average than usual, which some traders read as the stock being "stretched" and worth a closer look for a potential mean-reversion setup — a bet that price snaps back toward its average. A break below the lower band is a signal to look, not a guarantee or an automatic buy trigger — a stock can keep falling well past its lower band in a real downtrend.