Bollinger Band & Price Volatility
When forex price volatility is high; prices close far away from the moving average, the Bollinger Band width increases to accommodate more possible forex price action movement which can fall within 95 % of the mean.
Bollinger Band forex indicator will widen as forex price volatility widens. This will show as the bollinger band bulges around the price. When the bollinger bands widen like this it is a continuation forex pattern and price will continue heading and going in this direction. This is normally a continuation forex signal.
The Bollinger band forex indicator example below illustrates and shows the Bollinger bulge.
High Forex Price Volatility - Bollinger Band Bulge
When forex price volatility is low: prices close closer toward the moving average, the width decreases to reduce the possible forex price action movement which can fall within 95 % of the mean.
When forex price volatility is low price will start to consolidate waiting for the price to breakout. When the bollinger bands indicator is moving sideways it's best to stay on the sidelines & not to place and open any trade positions.
The Bollinger band indicator examples is illustrated below when the bollinger bands narrowed.
Low Price Volatility - Bollinger Band Indicator - Bollinger Band Squeeze
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