Bollinger Bands are a type of price envelope developed by John Bollinger. Price envelopes define upper and lower price range levels. Bollinger Bands are envelopes which are plotted at a standard deviation level above and below a simple moving average of the price. They adjust to volatility swings in the underlying price due to the distance of the bands which are based on standard deviation.
Bollinger Bands use two parameters, Period and Standard Deviations, StdDev. The default values are 20 for period, and a couple of for normal deviations, although one can customize the combinations.
Bollinger bands help to determine whether the prices are high or low on a relative basis. They are utilized in pairs, both upper and lower bands and in conjunction with a moving average. Further, the pair of bands is not intended to be used on its own. The pair is used to confirm signals given with other indicators.