Bollinger BandWidth

Bollinger BandWidth

Bollinger BandWidth is an indicator derived from Bollinger Bands. In his book, Bollinger on Bollinger Bands, John Bollinger refers to Bollinger BandWidth as one of two indicators that can be derived from Bollinger Bands. The other indicator is %B.

BandWidth measures the percentage difference between the upper band and the lower band. BandWidth decreases as Bollinger Bands are based on the standard deviation, falling BandWidth reflects decreasing volatility and rising BandWidth reflects increasing volatility

Defining Narrowness and free forex signals

It is important to get a good look-back period to define BandWidth range for a particular ETF, index or stock.

Free forex signals  : The Squeeze

Bosinger BandWidth is best known for identifying The Squeeze. This occurs when volatility falls to a very low level, as evidenced by the narrowing bands. The upper and lower bands are based on the standard deviation, which is a measure of volatility. The price is a relatively small range. The theory is that periods of low volatility are followed by periods of high volatility. Relatively narrow BandWidth (aka the Squeeze) can foreshadow a significant advance or decline. After a Squeeze, a price surge And subsequent band break signal the start of a new move. A new advance starts with a Squeeze and subsequent break above the upper band. A new decline starts with a Squeeze and subsequent break below the lower band.

The BandWidth indicator can be used to identify the Bollinger Band Squeeze. This free forex signals  chartists to prepare for a move, but direction depends on the subsequent band break. A squeeze followed by a break above the upper band is bullish forex signals  , while a After careful after a head below the lower band is bearish. Be careful of head-fakes however. Sometimes the first break fails to hold as prices reverse the other way. Strong breaks hold and seldom look back. An upside breakout followed by an immediate pullback Should serve as a warning.

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