Bollinger Band Width

The Bollinger Band Width indicator provides an easy way to visualize consolidation before price movements (low band width values) or periods of higher volatility (high band width values).

Bollinger Band Width

The Bollinger Band Width indicator provides an easy way to visualize consolidation before price movements (low band width values) or periods of higher volatility (high band width values).


Bollinger Band Width Calculation

The Bollinger Band Width takes the same two parameters as the Bollinger Bands: a simple moving average period (for the middle band) and the number of standard deviations by which the upper and lower bands should be offset from the middle band.

The Bollinger Band Width is the difference between the upper and the lower Bollinger Bands divided by the middle band.  

Price Chart with Bollinger Band Width Indicator drawn below

Interpretation of Bollinger Band Width

The Bollinger Band Width indicator signals changes in volatility.  A rapid rise in volatility often occurs when the bands converge into a narrow neck.  A Bollinger Band narrow neck (or squeeze) is highlighted by a fall in the Band Width indicator to below 2.0%.

Bollinger claims that a drop below 2% on the S&P 500 has led to many spectacular moves, but warns that the market often starts with a fake move, in the wrong direction, before the real move commences.

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