Bollinger Bands Indicator and Price Volatility

When forex price volatility is high; forex prices close far away from the moving average, the forex Bollinger Bands width increases to accommodate more possible forex price action movement which can fall within 95% of the mean.

Bollinger bands indicator will widen as forex price volatility widens. This will show as bollinger band bulges around the forex price. When the forex bollinger bands widen like this it is a continuation forex pattern and price will continue moving in this direction. This is normally a continuation forex trading signal.

The Bollinger bands indicator example below illustrates the Bollinger bulge.

High Price Volatility - Forex Bollinger Bands Bulge

When forex price volatility is low: forex prices close closer toward the moving average, the width decreases to reduce the possible forex price action movement which can fall within 95% of the mean.

When forex price volatility is low price will start to consolidate waiting for price to breakout. When the forex bollinger bands indicator is moving sideways it is best to stay on the sidelines and not to place any forex trades.

The Bollinger bands indicator examples is illustrated below when the forex bollinger bands narrowed.

Low Price Volatility - Forex Bollinger Bands Trading Indicator