Bollinger Bands |
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Bollinger Bands Technical Indicator (BB) is similar to

Bollinger Bands are usually plotted on the price chart, but they can be also added to the indicator chart (Custom Indicators). Just like in case of the

The following traits are particular to the Bollinger Band:

- abrupt changes in prices tend to happen after the band has contracted
due to decrease of volatility.
- if prices break through the upper band, a continuation of the current trend is to be expected.
- if the pikes and hollows outside the band are followed by pikes and hollows inside the band, a reverse of trend may occur.
- the price movement that has started from one of the band’s lines usually reaches the opposite one. The last observation is useful for forecasting price guideposts.

ML = SUM [CLOSE, N]/N

The top line, TL, is the same as the middle line a certain number of standard deviations (D) higher than the ML.

TL = ML + (D*StdDev)

The bottom line (BL) is the middle line shifted down by the same number of standard deviations.

BL = ML — (D*StdDev)

Where:

N — is the number of periods used in calculation;

SMA —

StdDev — means Standard Deviation.

StdDev = SQRT(SUM[(CLOSE — SMA(CLOSE, N))^2, N]/N)

It is recommended to use 20-period