Description:
Bollinger Bands Width is 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 measuring the distance between the upper and lower bands.
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.
- Price Source: Specific data points (such as open, high, low, or close) from each candle in a financial chart that an indicator uses for mathematical computations, enabling the calculation of metrics like the average over a specified period.
Use Cases:
- Price Squeezes: The narrowing of the bands and lower volatility period of price action.
- Price Expansions: The widening of the bands and higher volatility period of price action.
- 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 9, 2024