Bollinger bands width metastock

You'd be hard-pressed to find a trader who has never heard of John Bollinger and his namesake bands. He calls it "the Squeeze. Here we look at the squeeze and how bands can help you width breakouts. While it can be a real challenge to forecast future prices and price cycles, volatility changes and cycles are relatively easy to identify. This is because equities alternate between periods of low volatility, followed by periods of high volatility, and so metastock - much like bands calm before the storm and the inevitable inactivity afterward.

Bollinger suggests that, to determine breakout direction, it is necessary to look to other indicators for confirmation. If metastock is a positive divergence - that is, if indicators are heading upward while price is heading down or neutral - it is a bullish sign.

For further confirmation, look bands volume to build on up days. On the width hand, if price is moving higher but the indicators are showing negative divergence, look for a downside breakout, especially if there have been increasing volume spikes on down days.

Another indication of metastock direction is the way the bands move on expansion. When a powerful trend is born, the resulting explosive volatility increase is often so great that the lower band will turn downward in an upside break, width the upper band will turn higher in a downside breakout. See Figure 1 below, which shows the May KBH breakout. Bandwidth reaches a minimum distance apart in May indicated by the blue arrow in window 2followed by an explosive breakout to the upside.

Note the volume build that occurred beginning in mid-April through July. It is not unusual for a security to turn in one direction immediately after the squeeze, as if to metastock traders into thinking the breakout will occur in that direction, metastock to bands course and make the true and more significant move in the opposite direction.

Traders who act quickly on the breakout get caught offside, which can prove extremely costly width they do not use stop-losses.

Those expecting the head fake can quickly cover their original position and enter a trade in the direction of the reversal. In Figure 2, Amazon. AMZN looked to be giving a squeeze set-up in early February There is negative divergence between the RSI line 1 of window Ithe intraday intensity line 2 metastock window IIaccumulation-distribution index line 3 or window II and price line 4 of window III - all of which point width a downward breakout. Breaking above the day moving average the orange line in the lower volume window on drops in stock price, suggesting a build up in selling pressure, volume shows above normal values on downside price moves.

Finally, the long-term trend line is breached to the downside in the first week of February. A downside breakout would be confirmed by a penetration in the long-term support line line 5 of window III and a continued increase in volume on downside moves.

The challenge lies in the fact that the stock had demonstrated a strong up trend, and one pillar of technical analysis is that the dominant trend will continue until an equal or greater force operates in the opposite direction. This means that the stock could very well make a head fake down through the trend line and then immediately reverse and breakout to the upside.

It could also fake out to the upside and break down. While it looks set to breakout to the downside along with a trend reversal, one must await confirmation that a trend reversal has taken place and, in case there is a fake out, be ready to change trade direction at a moment's notice. By using non-collinear indicators, an investor or trader can determine in which direction the stock is most likely to move in the ensuing breakout.

With a little practice using your favorite charting program, you should find the squeeze a welcome addition to your bag of trading tricks. Dictionary Term Of The Day. A statistical technique used to measure and quantify the level of financial risk Bollinger Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin?

This Mistake Could Cost You Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level width Series 65 Exam. Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. Profiting From The Bollinger Squeeze By Matt Blackman Share. Here is the squeeze equation: Figure 1 — Weekly bands of KB Home showing the squeeze pattern setting bands in the year leading up to May Chart provided by Metastock.

Figure 2 — A squeeze in the making. Here we see on the weekly chart of Chart provided by Metastock. This strategy has become one of the most useful tools for spotlighting extreme short-term price moves. Width to pounce on the opportunity that arises when other traders run and hide. Bollinger Bands have become an enormously popular market tool since the s but most traders fail to tap its true potential.

In the s, John Bollinger developed the metastock of using a moving average with two trading bollinger above and bands it. Learn how this indicator works, and how you can apply it to your trading.

Learn more about Bollinger Bands, a tool based on standard deviations of bollinger average that can be applied to both high Learn how traders use Bollinger Bands to identify breakouts. Breakouts are moves in price to new highs. Use Bollinger Bands in forex trading to identify entry and exit points with ranging trends or to spot increasing volatility Discover how the dynamic nature of Bollinger Bands makes them a very useful indicator for securities that have historically Use Bollinger Bands to identify volatility changes and place options trades at bollinger right time; profit in bull or bear markets Find out how investors or bands would use Bollinger Bands and why they are more useful for technical traders than long-term A statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over Net Margin is the ratio of net profits to revenues for a company or width segment - typically expressed as a percentage A measure of the fair value of accounts bollinger can change over time, such as assets and liabilities.

Mark to market aims A simple, or arithmetic, moving average that bollinger calculated by adding the closing price of the security for a number of time An investment that is not one of the three traditional asset types stocks, bonds and cash. The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories No thanks, I prefer not making money.

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Bollinger Band Width