Bollinger Bands Stock Indices Indicator Bulge and Squeeze Technical Analysis

The Stock Indices Trading Bollinger Band are self adjusting which means the bands widen and narrow depending on stock index price volatility.

Standard Deviation is the statistical measure of the stock index price volatility used to calculate the widening or narrowing of the stock indices Bollinger bands. Standard deviation will be higher when prices are changing significantly and lower when the stock indices market stock index prices are calmer.

• When stock index price volatility is high the Bollinger Bands widen.
• When stock index price volatility is low the Bollinger Bands narrows.

How to Trade Bollinger Bands Squeeze

Narrowing of stock indices Bollinger Bands is a sign of stock index 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 stock index price consolidation, and it is a stock indices signal that there will be a stock index price breakout and it shows stock indices traders are adjusting their trade positions for a new move. Also, the longer the stock index prices stay within the narrow bands the greater the chance of a stock index price breakout.

Bollinger Squeeze - The Bollinger Bands Squeeze - How to Trade Bollinger Bands Squeeze

How to Trade Bollinger Bands Bulge

The widening of Bollinger Bands is a sign of a stock index price breakout and is known as the Bollinger Bands Bulge.

Bollinger Bands that are far apart can serve as a stock indices signal that a stock indices trend reversal is approaching. In the Bollinger bands stock indices indicator example illustrated below, the stock indices Bollinger bands get very wide as a result of high stock index price volatility on the down swing. The stock indices trend reverses as stock index prices reach an extreme level according to statistics and the theory of normal distribution. The "bulge" predicts the change to a stock index trading downwards trend.

Bollinger Bulge - The Bollinger Bulge - How to Trade Bollinger Band Bulge