Meaning of wide bollinger bands
Bollinger Bands Width BBW is a technical analysis indicator derived from the standard Bollinger Bands indicator. Bollinger Bands are a volatility indicator which creates a band of bollinger lines which are plotted in relation to a security's price. The Middle Line is typically a 20 Day Simple Moving Average. The Upper and Lower Bollinger are typically 2 standard deviations above and below the SMA Middle Line. Bollinger Bands Width serve as a way to quantitatively measure the width between the Upper and Lower Bands. BBW can be used to identify trading signals in some instances. The creator of Bollinger BandsJohn Bollinger, introduced Bollinger Bands Width in almost 3 decades after the introduction of his Bollinger Bands. Bollinger Bands Width BBW uses the given calculation and outputs a Percentage Difference between the Upper Band and the Lower Band. This value is used to define the narrowness of the bands. What needs to be understood however is that a trader cannot simply look at the BBW value and determine if the Bands is truly narrow or not. The significance of an instruments relative narrowness changes depending on the instrument or security in question. What is considered narrow for one security may not be for another. What is considered narrow for one security may even change within the scope of the same security depending bollinger the timeframe. In order to accurately gauge the significance of a narrowing of the bands, a technical analyst will need to research past BBW fluctuations and price performance to increase trading accuracy. One of the most well-known theories in regards to Bollinger Bands is that bands typically fluctuates between periods of meaning Bands Widening and contraction Bands Narrowing. With this in mind, the major trading signal generated by Bollinger Bands Width is known as "The Squeeze". In a Wide BBW Squeeze. In a Bearish BBW Squeeze. Bollinger Bands Width BBW be quite a useful technical analysis tool for identifying "The Squeeze" which can result in some nice buying or selling signals. Of course the trader should always use caution. Sometimes the breakout after a Squeeze setup has an immediate pullback and the rally never happens. It takes a trader's better judgment to really determine if the breakout is a strong, legitimate one. That being said, when a strong meaning or downtrend after a Squeeze does occur it provides a great opportunity for the prepared analyst or trader. The time period to be used in calculating the SMA which creates the base for the Upper and Lower Bands. The number of Standard Deviations away from the SMA that the Upper and Lower Bands should be. Can toggle the visibility of Bollinger Bands Width as well as the visibility of a price line showing the actual current value of the Bollinger Bands Width. Can also wide the ATR Line's color, line thickness and visual type Line is the default. Sets the number of decimal places to be left on the indicator's value before rounding up. The higher this number, the more decimal points will be on the indicator's value. Toggles the visibility of the indicator's name and settings in the upper left hand corner of the chart. TradingView Wiki Go to TradingView Ideas Scripts Chart. Retrieved from " https: Navigation menu Personal tools Log in. Views Read Meaning source View history. Tools What links here Related changes Special pages Printable version Permanent link Page information. This page was last modified on 15 Novemberat Privacy policy Wide Tradingview Wiki Disclaimers.
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