Bollinger Bands width XAUUSD Analysis & Bollinger Bands width XAUUSD Signals

Developed by John Bollinger.

This xauusd/gold 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 Bandwidth value for a previous No. of given periods.

This line also identifies the periods of high price volatility

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

This line also identifies the periods of low market volatility

Gold Analysis and How to Generate Signals

Consolidation - Bollinger Squeeze

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

The Signals are generated when there is a price break out - signal is derived/generated by the technical indicator beginning to go upwards after touching the red line. When the band-width 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 & needs to be combined together with another indicator such as the moving average MA to figure out the direction of the market trend/ Breakout.

Study More Topics and Tutorials:

• EUR ZAR Spread Explained
• The Encyclopedia of the Indicator RSI Relative Strength Index Indicator
• FX Strategies Forum
• Support and Resistance Levels MetaTrader 4 Technical Indicator
• How to Use MetaTrader 5 True Strength Index TSI Indicator
• FTSE 100 MT4 FTSE Name on MetaTrader 4 Software Platform
• Methods of Placing Stop Losses in Gold
• How to Add S & P ASX200 Index in MetaTrader 5 Platform
• Indices Strategy for Wall Street30 in Forex