Bollinger Band Indicator Bulge and Squeeze Trading Analysis

The Indices Bollinger Bands are self adjusting which means the bands widen & narrow depending on price volatility.

Standard Deviation is the statistical measure of the price volatility used to calculate the widening or narrowing of the Indices Bollinger bands. Standard deviation will be higher when the prices are changing significantly and lower when the market prices are calmer.

• When price volatility is high the Bollinger Bands widen.
• When price volatility is low the Bollinger Bands narrows.

The Bollinger Bands Squeeze - How to Trade Bollinger Bands Squeeze

Narrowing of Stock Indices Bollinger Bands is a sign of price consolidation & is known as the Bollinger band squeeze.

When the Bollinger Bands Stock Index indicator display narrow standard deviation it is usually a time of price consolidation, & it is a signal that there will be a price breakout and it shows Stock Indices traders are adjusting their trade positions for a new move. Also, longer the prices stay within the narrow bands the greater the chance of a price breakout.

Bollinger Squeeze - How to Trade Bollinger Bands Squeeze

The Bollinger Bulge - How to Trade Bollinger Bands Bulge

The widening of Bollinger Bands is a sign of a price breakout and is known as the Bollinger Bands Bulge.

Bollinger Band that are far apart can serve as a signal that a trend reversal is approaching. In the Bollinger bands Stock Index indicator example below, Bollinger bands get very wide as a result of high price volatility on the down swing. The trend reverses as prices reach an extreme level according to statistics & the theory of normal distribution. The "bulge" predicts the change to a downtrend.

Bollinger Bulge - How to Trade Bollinger Bands Bulge