Bollinger Bands Indicator Bulge & Squeeze Analysis

The Trading Bollinger Bands are self adjusting which means the bands widen and narrow depending on price volatility.

Standard Deviation is a statistical measure of the volatility of price used in calculating the widening/narrowing of the Bollinger bands. Standard deviation will be higher when prices are changing significantly and lower when prices are calmer.

• When price volatility is high the Bollinger Band widen.
• When price volatility is low the Bollinger Bands narrows.

How to Trade Bollinger Bands Squeeze

Narrowing of xauusd Bollinger Band is a sign of price consolidation and is known as Bollinger band squeeze.

When the Bollinger Band display narrow standard deviations it's generally a time of price consolidation, and it is a trading signal that there'll be a price breakout and it shows traders are adjusting their trades for a new move. Also, the longer the prices stay within the narrow bands the greater the chance of a price break-out.

Bollinger Squeeze - The Bollinger Band Squeeze - How to Trade Bollinger Bands Squeeze

How to Trade Bollinger Bands Bulge

The widening of Bollinger Band is a sign of a price break out and is known as Bollinger Bands Bulge.

Bollinger Bands that are far apart can serve as a signal that a price trend reversal is approaching. In the Bollinger bands indicator example shown below, the Bollinger bands get very wide as a result of high price volatility on the down swing. The trend reverses as prices reach and get to an extreme level according to statistics & the theory of normal distribution. The "bulge" predicts the change to a downwards trend.

Bollinger Bulge - The Bollinger Bulge - How to Trade Bollinger Bands Bulge

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