The volatility bands are calculated using moving averages, adjusted up or down by the annualized volatility. The widest band represents fluctuations based on an average of 40 days, indicating possible movements in the medium term. The thinnest band is calculated on the same principle, but on a shorter frequency of 20 days.

When the stock's price breaks out of the bands it is a statistical anomaly and a return to the interior of the bands can be expected within the coming weeks.

When the interior band touches the exterior band, the stock's price very often rebounds in the opposite direction.