when the price of an asset touches or falls below the lower band this could mean the asset is undervalued or that the selling pressure has gone too far potentially leading to a reversal or pause in the downward trend 1
just as touching the upper band signals an increase in volatility the price reaching the lower band indicates greater volatility in the context of a downward move however when the bands narrow after a period of wide fluctuation there s decreased volatility which might mean a significant price move as the price consolidates 6for investors employing mean reversion strategies or looking for bounce back opportunities the lower band can be used as a target for buying prospects the rationale is that if the price has moved down to the lower band it might rebound toward the middle band or higher especially in a ranging market without a strong downtrend 5that said if the price stays below the lower band this signals a strong downtrend continual contact with the band or new lows below could indicate the bearish sentiment is strong and likely to continue however you should confirm this with other indicators to avoid false signals or traps 8a decisive move below the lower band can signify a breakdown or the start of a new bearish trend especially if the volume is high and there are other bearish signals since further declines could occur you can use this as a potential signal to sell or enter a short position 