Bollinger Band width Indices Analysis & Bollinger Band width Trading Signals

Developed by John Bollinger.

This stock indicator is derived from the original and initial Bollinger indicator.

Bandwidth is a measure of the width of the Bollinger Band

Calculation

Band-width = Upper Band - Lower Band

Middle Band

Bollinger Band-width Indicator - Bollinger Band-width Indicator

This is an oscillator, based on the theory that stock trading price & volatility occurs in cycles.

Periods of high price volatility is followed by the periods of low price volatility.

When volatility is high, bands are far apart, the bandwidth will also be wide apart.

When volatility is low, Bands are narrow and the band-width technical indicator also will be narrow.

The blue line represents the highest Band-width value for a previous number of periods.

This line also identifies the periods of high price volatility

The red-line represents the lowest Band-width value for a previous number of given periods.

This line also identifies the periods of low price volatility

Indices Analysis & Generating Trade Signals

Consolidation - Bollinger Squeeze

Bollinger Band-width is used to identify the squeeze, which is a consolidation period of trading price, after which the stock price then breaks out in a particular direction.

The Signals are derived & generated when there is a indices price break out - signal is generated by the indicator starting to go up after touching the red line. When the bandwidth line starts and begins to move upward it signifies that volatility is rising as the stock price is breaking out.

Bollinger Band-width Indicator Squeeze - Bollinger Band-width Indicator Analysis

Squeeze

Breakout Signal After Bollinger Band-width Squeeze - Bollinger Band-width Indicator

Break Out Signal After Band-width Squeeze

However, this is a directionless indicator and needs to be combined with another trading indicator such as the moving average to identify the direction of the trend/ Breakout.

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Trade Stock Indices

Bollinger Band width Indices Analysis & Bollinger Band width Trading Signals

Indices Analysis & Generating Trade Signals