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--- technical_indicators:bollinger_band_width [2019/06/24 19:39]
127.0.0.1 external edit
+++ technical_indicators:bollinger_band_width [2023/09/06 21:33] (current)
jayanthi [Bollinger BandWidth FAQs]
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 ====== Bollinger BandWidth ======
-===== Introduction =====
+===== What Is Bollinger BandWidth? =====
 Bollinger BandWidth is an indicator derived from [[:technical_indicators:bollinger_bands|Bollinger Bands]]. In his book, //Bollinger on Bollinger Bands//, John Bollinger refers to Bollinger BandWidth as one of two indicators that can be derived from Bollinger Bands (the other being %B).
-BandWidth measures the percentage difference between the upper band and the lower band. BandWidth decreases as Bollinger Bands narrow and increases as Bollinger Bands widen. Because Bollinger Bands are based on the standard deviation, falling BandWidth reflects decreasing volatility and rising BandWidth reflects increasing volatility.
+BandWidth measures the percentage difference between the upper band and the lower band. BandWidth decreases as Bollinger Bands narrow and increases as Bollinger Bands widen. Because Bollinger Bands are based on the standard deviation, falling BandWidth reflects decreasing volatility, and rising BandWidth reflects increasing volatility.
-===== SharpCharts Calculation =====
+===== SharpCharts Bollinger BandWidth Calculation =====
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 {{:technical_indicators:bollinger_band_width:bbw-7-honsqueez.png|Chart 7}}
-===== Summary =====
+===== The Bottom Line =====
-The BandWidth indicator can be used to identify the Bollinger Band Squeeze. This alerts chartists to prepare for a move, but direction depends on the subsequent band break. A squeeze followed by a  break above the upper band is bullish, while a squeeze followed by a break below the lower band is bearish. Be careful of head-fakes however. Sometimes the first break fails to hold as prices reverse the other way. Strong breaks hold and seldom look back. An upside breakout followed by an immediate pullback should serve as a warning.
+Derived from Bollinger Bands, the BandWidth indicator is a tool to identify periods of low and high market volatility. This, in turn, can give you some insight into potential market movements. The direction depends on the subsequent band break. The condition known as "The Squeeze" happens when the BandWidth is at a historically low level, suggesting that a significant price move is imminent, more or less. Once you identify the squeeze, it's time to watch for a breakout above the upper band, indicating an upward trend, or a break below the lower band, hinting at a downward trend. Like all indicators, you should approach its signals with caution, as initial breaks can sometimes fail, and not all signals are reliable.
 ===== Using with SharpCharts =====
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 </code>
-For more details on the syntax to use for BandWidth scans, please see our [[docs>scans:indicators#bollinger_band_width_bb_width|Scanning Indicator Reference]] in the Support Center.
+For more details on the syntax to use for BandWidth scans, please see our [[https://support.stockcharts.com/doku.php?id=scans:indicators#bollinger_band_width_bb_width|Scanning Indicator Reference]] in the Support Center.
+===== Bollinger BandWidth FAQs =====
+==== What do increasing and decreasing BandWidth values indicate? ====
+An increasing BandWidth reflects increasing volatility in the price, while a decreasing BandWidth reflects decreasing volatility.
+==== What is the significance of the "Squeeze" in the Bollinger BandWidth context? ====
+The "Squeeze" is when volatility falls to a very low level, causing the bands to narrow. This phenomenon can foreshadow a significant price movement either upwards or downwards.
+==== How should BandWidth values be gauged over time? ====
+BandWidth values should be compared to prior BandWidth values over a significant timeframe, like an eight- to 12-month chart, to determine what is considered "narrow" or "wide" for that particular security.
+==== Can BandWidth values be compared across different securities? ====
+Yes, but it's crucial to note that securities with lower volatility will naturally have lower BandWidth values than those with higher volatility. For instance, utility stocks generally have lower BandWidth values than technology stocks.
+==== What caution should you take after observing a Squeeze followed by a band break? ====
+You should be cautious of "head-fakes" or false signals. Sometimes, after a Squeeze, the initial band break might not hold, causing prices to reverse in the opposite direction. It's essential to observe the strength of the breakout; strong breaks are less likely to revert, while weak breakouts followed by immediate pullbacks should serve as warnings.