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Bollinger Band width Technical Analysis and Bollinger Band width Signals

Developed by John Bollinger.

This trading indicator is derived from the original Bollinger technical indicator.

Bandwidth is a measure of the width of the Bollinger Band

Calculation

Bandwidth = Upper Band - Lower Band

Middle Band

Bollinger Band-width Technical Analysis - Bollinger Band-width Indicator Guide

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

Periods of high volatility is followed by periods of low volatility.

When volatility is high, bands are far apart, the bandwidth also will be wide apart.

When volatility is low, Bands are narrow and the band-width trading indicator also will be narrow.

The blue line represents the highest Band-width value for a previous number of periods.

This line also identifies periods of high volatility

The redline represents the lowest Bandwidth value for a previous number of periods.

This line also identifies periods of low volatility

Forex Technical Analysis & How to Generate Signals

Consolidation - Bollinger Squeeze

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

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

Bollinger Band-width Technical Indicator - How to Place Forex Bollinger Band-width Indicator on Chart

Squeeze

Breakout Signal After Bollinger Band-width Squeeze

Breakout Signal After Bandwidth Squeeze

However, this is a directionless indicator & needs to be combined with another technical indicator such as the MA to figure out the direction of the trend/ Break Out.

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