Bollinger Band Indicator Bulge & 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 in calculating the widening or narrowing of the Indices Bollinger bands. Standard deviation will be higher when the prices are changing significantly and lower when the 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 the Bollinger Bands Squeeze
Narrowing of Index Bollinger Bands is a sign of price consolidation & is known as the Bollinger band squeeze.
When the Bollinger Bands Index indicator displays narrow standard deviations it is mostly a time of price consolidation, & it's a trade signal which there will be a price breakout and it shows Index 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 Index indicator illustration put on display below, Bollinger bands get very wide as a result of high price volatility on the down swing. The trend reverses as prices get to 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
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