Bollinger bands nse

Bollinger BandWidth is an indicator derived from Bollinger Bands. In his book, Bollinger on Bollinger BandsJohn Bollinger refers to Bollinger BandWidth as one of two indicators that can be derived from Bollinger Bands. BandWidth measures the percentage difference between the upper band and the lower band. BandWidth decreases as Bollinger Bands narrow and increases as Bollinger Bands widen.

Because Bollinger Bands are based on the standard deviation, falling BandWidth reflects decreasing volatility and rising BandWidth reflects increasing volatility.

Bollinger Bands consist of a middle band with two outer bands.

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The middle band is a simple moving average usually set at 20 periods. The outer bands are usually set 2 standard deviations above and below the middle band.

Settings can be adjusted to suit the characteristics of particular securities or trading styles. When calculating BandWidth, the first step is to subtract the value of the lower band from the value of the upper band. This shows the absolute difference. This difference is then divided by the middle band, which normalizes the value. This normalized Bandwidth can then be compared across different timeframes or with the BandWidth values for other securities.

The chart above shows the Nasdaq ETF QQQ with Bollinger Bands, BandWidth, and the Standard Deviation. Notice how BandWidth tracks the Standard Deviation volatility. Both rise and fall together.

The image below shows a spreadsheet with a calculation example. Narrow BandWidth is relative. BandWidth values should be gauged relative to prior BandWidth values over a period of time. It is important to get a good look-back period to define BandWidth range for a particular ETF, index or stock. For example, an eight to twelve-month chart will show BandWidth highs and lows over a significant timeframe.

BandWidth is considered narrow as it approaches the lows of this range and wide as it approaches the high end. Securities with low volatility will have lower BandWidth values than securities with high volatility. For example, the Utilities SPDR XLU represents utility stocks, which have relatively low volatility. The Technology SPDR XLK represents technology stocks, which have relatively high volatilities. Because of lower volatility, XLU will have consistently lower BandWidth values than XLK.

The day moving average of XLU BandWidth is below 5, while the day moving average of XLK BandWidth is above 7. Bollinger BandWidth is best known for identifying The Squeeze. This occurs when volatility falls to a very low level, as evidenced by the narrowing bands. The upper and lower bands are based on the standard deviation, which is a measure of volatility. The bands narrow as price flattens or moves within a relatively bollinger bands nse range.

The theory is that periods of low volatility are followed by periods of high volatility. Relatively narrow BandWidth a.

After a Squeeze, a price surge and subsequent band break signal the start of a new move. A new advance starts with a Squeeze and subsequent break above the upper band. A new decline starts with a Squeeze and subsequent break below the lower band.

Chart 2 shows Alaska Airlines ALK with a squeeze in mid-June. After declining in April-May, ALK stabilized in early June as Bollinger Bands narrowed. BandWidth dipped below 10 to put the Squeeze play on in mid-June.

Even though this level seems high, it is actually quite low for ALK. With the subsequent surge above the upper band, the stock broke out to trigger an extended advance.

Bollinger Bands

Chart 3 shows Aeropostale ARO with a couple of Squeezes. A horizontal line was added to the indicator window.

This line marks 8, which is deemed relatively low based on the historical range. The BandWidth indicator alerted salem virginia stocked market to be ready for a move in mid-August.

The stock obliged with a surge above the upper band and continued higher throughout September. The advance stalled in late September and BandWidth narrowed again in October. Notice how BandWidth declined forex online signal trading tutorials the lows set in August and then flattened out. The subsequent break below the lower Bollinger Moneysupermarket currency cards triggered a bearish signal in late October.

The Squeeze can also be applied to weekly charts or longer timeframes. Volatility bollinger bands nse BandWidth are typically higher on the weekly timeframe than a daily timeframe. This makes sense because larger price movements can be expected over longer timeframes. Chart 4 shows Barrick Gold ABX consolidating throughout and into As the consolidation 1939 stock market returns and a triangle formed, Bollinger Bands contracted and BandWidth dipped below 10 in January Notice how BandWidth remained at low levels as the consolidation extended.

A bullish signal triggered with the breakout in July BandWidth also rose as prices moved sharply in one direction and Bollinger Bands widened. Chart 5 shows Honeywell HON with an extended trading range in the area. There was a move to the upper band in May, but no breakout for a signal. Instead, HON clearly broke below the lower band to trigger a bearish signal in June The BandWidth indicator can be used to identify the Bollinger Band Squeeze.

This alerts chartists to prepare for a move, but direction depends on the subsequent band break. A squeeze followed by a break above the upper band is bullish, while a squeeze followed by a break below the lower band is bearish. Be careful of head-fakes however. Sometimes the first break fails to hold as prices reverse the other way. Strong breaks hold and seldom look back. An upside breakout followed by an immediate pullback should serve as a warning. Bollinger BandWidth can be found in the indicator list on SharpCharts.

The default parameters 20,2 are based on the default parameters for Bollinger Bands. These can be changed accordingly. BandWidth can be positioned above, below or behind the price plot. Click here to see a live example of BandWidth. Normalized Bollinger BandWidth is shown in the Market Carpet and this allows users to compare BandWidth for a number of securities. A shaded delta icon shows percentage change. A white delta icon shows absolute levels.

Green boxes show stocks with relatively wide BandWidth. Light boxes show stocks with relatively narrow BandWidth. A list of the stocks with the narrowest BandWidth is shown at the bottom right of the Market Carpet Bottom 5. Click the names to see a small chart above. Users can dive into the sectors by clicking on the sector heading e. With nine sectors and the Bottom 5 stocks listed for each sector, users can quickly view 45 stocks with relatively narrow BandWidth.

This scan reveals stocks whose Bollinger Bands just expanded rapidly after being contracted for 5 or more days. For more details on the syntax to use for BandWidth scans, please see our Scanning Indicator Reference in the Support Center.

Bollinger BandWidth [ChartSchool]

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