Alternatively, if it doesn't hold at this trendline support, we would expect it to continue its decline and create a new downward trend channel and possibly test its old lows. Bollinger Bands Bollinger bands are useful in determining when a stock is ready to make a strong move in one direction or another. If the stock is in an uptrend and has found support at its short term moving averages, BB convergence usually indicates an upward move. Bollinger Bands are based on volatility. Converging or narrowing bollinger bands indicates a period of lower volatility and a quiet market, which many times is followed by a period of higher volatility and price movement.
Wider bands indicate periods of higher volatility and a strong trend.
When a stock price extends beyond the envelope of the bollinger bands on either the high or low side, the stock price will usually pull back in within the boundaries before resuming or reversing its trend. Its 9 and 17 period mavg's are turning higher and the Bollinger Bands have tightened. The stock traded up over 60 points in the next 30 days before pulling back. We can also see the same scenario setting up again. The bollinger bands are tightening, the mavg's are turning, and we are seeing higher lows.