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Provides the moving average centerline of the Bollinger system, exposing the baseline price trend that the volatility bands expand from.
The middle Bollinger Band is a simple moving average, typically 20 periods. It serves as the baseline for the upper and lower bands.
The Bollinger Middle Band is the 20-period simple moving average that serves as the center line of Bollinger Bands. This band represents the "average" price over the lookback period and acts as an equilibrium line around which price oscillates. The middle band provides trend direction and serves as dynamic support and resistance.
The calculation:
Middle Band = 20-period Simple Moving Average (SMA-20)
Why the middle band matters:
- Trend indicator: Slope shows trend direction
- Mean reference: Price tends to revert to middle band
- Support/resistance: Acts as dynamic S/R depending on trend
- Band reference: Upper and lower bands calculated from middle
Interpreting price relative to middle band:
- Price above middle: Short-term bullish; above average
- Price below middle: Short-term bearish; below average
- Price at middle: Neutral; at equilibrium
- Rising middle band: Uptrend in progress
- Falling middle band: Downtrend in progress
Trading applications:
- Pullback entries: Buy when price pulls back to rising middle band
- Mean reversion: Expect extended prices to return to middle
- Trend confirmation: Price staying above/below confirms trend
- Stop placement: Place stops on opposite side of middle band
Middle band as support/resistance:
- In uptrends: Middle band often acts as support
- In downtrends: Middle band often acts as resistance
- Range-bound: Price oscillates around middle band
Middle band vs. other moving averages:
- Same as SMA-20: Functionally identical to 20-period SMA
- Band context: Value added by upper/lower band relationship
- Volatility adaptation: Bands widen/narrow based on price volatility
Trading strategies:
- Bounce strategy: Buy bounces off middle band in uptrends
- Band walk: Stay long while price stays between middle and upper
- Trend reversal: Watch for middle band slope changes
The middle band provides the foundation for Bollinger Band analysis. It defines trend direction, serves as a mean for reversion, and anchors the dynamic support and resistance provided by the upper and lower bands.