Bollinger Bands Indicator Bulge and Squeeze Technical Analysis
The Forex Bollinger Bands are self adjusting which means the bands widen and narrow depending on price volatility.
Standard Deviation is the statistical measure of the price volatility used to calculate the widening or narrowing of the forex Bollinger bands. Standard deviation will be higher when prices are changing significantly and lower when the forex market prices are calmer.
- When price volatility is high the Bollinger Bands widen.
- When price volatility is low the Bollinger Bands narrows.
The Bollinger Bands Squeeze - How to Trade Bollinger Bands Squeeze
Narrowing of forex Bollinger Bands is a sign of price consolidation and is known as the Bollinger band squeeze.
When the Bollinger Bands indicator display narrow standard deviation it is usually a time of price consolidation, and it is a forex trading signal that there will be a price breakout and it shows traders are adjusting their trade positions for a new move. Also, the longer the prices stay within the narrow bands the greater the chance of a price breakout.
The Bollinger Bands Squeeze - How to Trade Bollinger Bands Squeeze
The Bollinger Bulge - How to Trade Bollinger Bands Bulge
The widening of Bollinger Bands is a sign of a price breakout and is known as the Bollinger Band Bulge.
Bollinger Bands that are far apart can serve as a forex trading signal that a forex trend reversal is approaching. In the Bollinger bands indicator example below, the forex Bollinger bands get very wide as a result of high price volatility on the down swing. The forex trend reverses as prices reach an extreme level according to statistics and the theory of normal distribution. The "bulge" predicts the change to a forex downtrend.
Bollinger Bulge - The Bollinger Bulge
