Closing above the upper Bollinger band
A close above the upper Bollinger band means today’s price is unusually high compared with the last 20 days. It happens often. The figures below show what followed in Indian stocks.
What it measures
Bollinger bands wrap a 20-day average with an upper and lower line set by how much prices have varied. A close above the upper band means the price has moved further than usual for this stock, recently.
How it is calculated
Take the average of the last 20 closes and their standard deviation. The upper band is the average plus two standard deviations; the lower band, minus two. The event here is the first close above the upper band.
What happened next, in Indian stocks
These figures come from Sensifty’s monthly research and load here.
Why the bands move with the stock
Because the bands widen when prices swing more, they already adjust to each stock’s recent behaviour. That makes them useful for spotting unusual days, but they only look back 20 days, so a strong trend can ride the upper band for weeks.
What it does not tell you
Crossing the band shows an unusual day, not an unusual valuation or an approaching fall.
Related
Sensifty measures each of your stocks against its own history, and tells you once when a stretch cools off. Add to Chrome
Figures describe the past, among the 500 most traded NSE stocks at each date. They are not a forecast or a recommendation.