Technical Analysis Using Bollinger Bands Volatility Indicator

The Bollinger Bands Volatility Indicator are self adjusting which means the Bollinger bands widen and narrow depending on stock price volatility.

Standard Deviation is the statistical measure of price volatility that is used to calculate the widening of the Bollinger bands or narrowing of the Bollinger bands. Standard deviation will be higher when the prices are changing significantly and Standard deviation will be lower when the stock market prices are not changing a lot.

• When the price volatility is high the Bollinger Bands widen - Bollinger Bands Break out Strategy.
• When indices the price volatility is low the Bollinger Bands narrows - Bollinger Bands Consolidation Strategy.

The Bollinger Band Squeeze

Narrowing of the Bollinger Bands is a sign of price consolidation and is known as the Bollinger Bands Squeeze.

When the Bollinger Bands indicator illustrate narrow standard deviation it's usually a time of price consolidation, and this is also a signal that there will be a price breakout and it shows that traders are adjusting their trade positions for a new trend move. Also, the longer the prices stay within the narrow Bollinger Bands range the greater the chance of a price break out.

Bollinger Band Squeeze - Bollinger Bands Break Out Strategy - Bollinger Bands Consolidation Trading Method

Indices Bollinger Band Volatility Breakout

Widening of Bollinger Band technical indicator is a sign of a price break out & this is known as Bollinger Band Bulge.

Bollinger Bands indicator that are far apart can be interpreted as a signal that a trend reversal is likely to happen. In the Bollinger Bands indicator trading example explained and illustrated below, the Bollinger Bands get very wide as a result of high stock price market volatility. The trend reverses as prices reach an extreme level according to statistics & the theory of normal distribution. The "Bollinger Bands Bulge" predicts the change of the trend to a downward indices trend.

Bollinger Band Volatility Breakout - Bollinger Bands Breakout Method

Bollinger Band Volatility Indices Break out - Technical Analysis Using Bollinger Bands Volatility Indicator - Bollinger Bands Breakout Strategy - Bollinger Bands Consolidation Trading Method