Bollinger Bands Indices Indicator Bulge and Squeeze Technical Analysis
The Indices Bollinger Bands are self adjusting which means the bands widen and narrow depending on stock indices price volatility.
Standard Deviation is the statistical measure of the stock indices price volatility used to calculate the widening or narrowing of the indices trading Bollinger bands. Standard deviation will be higher when stock indices prices are changing significantly and lower when the stock indices trading market indices prices are calmer.
- When stock indices price volatility is high the Bollinger Bands widen.
- When stock indices price volatility is low the Bollinger Bands narrows.
The Bollinger Bands Squeeze
Narrowing of indices trading Bollinger Bands is a sign of stock indices price consolidation and is known as the Bollinger band squeeze.
When the Bollinger Bands stock indices indicator display narrow standard deviation it is usually a time of stock indices price consolidation, and it is a stock indices signal that there will be a indices price breakout and it shows indices traders are adjusting their trade positions for a new move. Also, the longer the stock indices prices stay within the narrow bands the greater the chance of a indices price breakout.
Bollinger Squeeze - The Bollinger Bands Squeeze - How to Indices Trade Bollinger Bands Squeeze
The Bollinger Bulge
The widening of Bollinger Bands is a sign of a indices price breakout and is known as the Bollinger Bands Bulge.
Bollinger Bands that are far apart can serve as a stock indices signal that a indices trend reversal is approaching. In the Bollinger bands stock indices indicator example explained and illustrated below, the indices trading Bollinger bands get very wide as a result of high stock indices price volatility on the down swing. The indices trend reverses as indices prices reach an extreme level according to statistics and the theory of normal distribution. The "bulge" predicts the change to a downward indices trend.
Bollinger Bulge - The Bollinger Bulge - How to Indices Trade Bollinger Bands Bulge