Bollinger Bands® bracket the 20-day simple moving average of a financial instrument with an upper and lower band The upper and lower bands are typically 2 standard deviations +/- from a 20-day simple moving average. Because standard deviation is a measure of volatility, when a financial instrument become more volatile the bands widen; during less volatile periods, the bands contract.
The squeeze is the central concept of Bollinger Bands®. When the bands come close together, constricting the moving average, it is called a squeeze. A squeeze signals a period of low volatility and is considered by traders to be a potential sign of future increased volatility and possible trading opportunities. Conversely, the wider apart the bands move, the more likely the chance of a decrease in volatility and the greater the possibility of exiting a trade.