Description:
Bollinger Bands are a widely used technical analysis tool traders and investors use to gauge market volatility, identify potential trends, and generate trading signals. This is calculated by the closing price relative to these bands. It quantifies the price's position relative to the upper and lower Bollinger Bands. The %B value indicates where the price is in relation to the bands, with values below 0 or above 1 suggesting that the price has moved beyond the bands, which could indicate overbought or oversold conditions.
Input Parameters:
- Length: Defines the window size for SMA.
- Dev.Up: Standard Deviation of the upper band.
- Dev.Down: Standard Deviation of the lower band.
- Upper: Presets to 1 which represents the upper boundary of the indicator
- Lower: Presets to 0 which represents the lower boundary of the indicator
Use Cases:
- Overbought Conditions: %B above 1 Above 1 indicates the closing price is above the upper band.
- Oversold Conditions: %B below 0 indicates the closing price is below the lower band.
- Neutral Conditions: %B value of 0.5 means the price is at the middle simple moving average.
- Recognizing Generated Signals: Traders can utilize both the Bollinger Band Width and %B together to identify potential entry and exit points in the market. For instance, a narrowing Bollinger Band Width (squeeze) followed by a %B crossing above 1 or below 0 may signal a strong price movement, indicating a good buying or selling opportunity.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our Learning Center Article.
May 17, 2024