Bollinger Band width MT4 Stock Indexes Indicator and Bollinger Band width Indices Trading Signals
Developed by John Bollinger.
This MT4 Indices Indicator is derived from the original Bollinger MT4 Indices Technical Indicator.
Bandwidth is a measure of the width of the Bollinger Bands.
Bandwidth = Upper Band - Lower Band
This is an MT4 Stock Indexes Indicator, based on the theory that stock indexes price and volatility occurs in cycles.
Periods of high volatility is followed by periods of low 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 bandwidth MT4 Indices Indicator will also not be narrow.
The blue line represents the highest Bandwidth value for a previous number of periods.
This line also identifies periods of high volatility
The red line represents the lowest Bandwidth value for a previous number of periods.
This line also identifies periods of low volatility
MT4 Indices Technical Indicator and Generating Indices Trading Signals
Consolidation - Bollinger Squeeze
Bollinger Bandwidth is used to identify the squeeze, which is a consolidation period of indices price, after which the stock indexes price then breaks out in a particular direction.
Signals are generated when there is a indices price breakout signal is generated by the MT4 Indices Indicator starting to go up after touching the red line. When the bandwidth line starts to move up it signifies that volatility is rising as the stock indexes price is breaking out.
Breakout Signal After Bandwidth Squeeze
However, this is a directionless MT4 Stock Indexes Indicator and needs to be combined with another MT4 Indices Indicator such as the moving average to determine the direction of the trend/ Breakout.