Bollinger Band width XAUUSD Analysis & Bollinger Band width XAUUSD Signals

Created by John Bollinger.

This xauusd indicator is derived from the original Bollinger indicator.

Bandwidth is a measure of the width of the Bollinger Bands.

Calculation

Band-width = Upper Band - Lower Band

Middle Band

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

Periods of high price volatility is followed by the 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 band-width indicator will also not be narrow.

The blue-line represents the highest Band-width value for a previous number of given 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 market volatility

Gold Analysis & How to Generate Signals

Consolidation - Bollinger Squeeze

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

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

Squeeze

Breakout Signal After Band-width Squeeze

However, this is a directionless indicator and needs to be combined with another indicator such as and like the moving average MA to figure out the direction of the market trend/ Breakout.

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