Hence, the upper band is your exit point. The other way of saying it would be one can determine the strength of the trend with band squeeze. And, always In the above example, the currency pair is in a downtrend. A squeeze refers to a very tight corridor formed by the contraction of the Bollinger Bands around the price. Signs of accumulation increase the chances of an upside breakout, while signs of distribution increase the chances of a downside break. It doesn’t matter what the actual number is because it’s relative only to the market you are looking to trade and nothing else.In this example you can see IBM stock reaching the lowest level of volatility in 6 months.

Chartists, therefore, must employ other aspects of technical analysis to formulate a trading bias to act before the break or confirm the break. The bands expand to the greatest during a breakout.

The “Bollinger Squeeze” is pretty self-explanatory. A Squeeze is potentially an indication of the start of a trend and a Bulge is an indication that a trend may be ending. This Bollinger Band Squeeze indicator package is the key to getting the most out of this powerful trading set up.The Charting tools in the Bollinger Band Squeeze package include:Bollinger Bands: which define high and low on a relative basis%B: which tells us where we are in relation to the bandsSqueeze/Bulge: which is used to identify the beginnings and ends of trendsSqueeze Breakout: which is used to find opportunities in the wake of a SqueezeBackIn: which is used to identify Head Fakes and other potential reversalsIntraday Intensity %: which is used to gauge supply and demandAlso there is a scan for on-demand searching of lists of tickers for trading opportunities, and a RadarScreen for monitoring watch lists in real time.These Bollinger Band tools can be applied in most markets; stocks, futures and forex are popular target markets. Appropriately, this indicator is called Bollinger BandWidth, or just the BandWidth indicator. Before breaking out, the stock opened below the lower band and then closed back above the band. The breakout may be towards or against the trend.Bollinger Band is ‘the jack of all conditions, but the king of the only sideways market.’ Hence to apply it in a wide range of market conditions, it is best to combine the bands with indicators like MACD or with There is a high level of risk in Margined Transaction products, such as, Foreign Exchange (FX), Bitcoins, Metals and Contracts for Difference (CFDs) trading which may not be suitable for all traders as the losses could exceed the total deposit at times; only use risk capital. The most commonly used SMAs in Bollinger bands are  20 and 25.

The Bollinger Bands parameters work together to show only stocks that have just entered a potential squeeze, as opposed to stocks that have already seen most of their gains following a squeeze. Momentum oscillators and moving averages are of little value during a consolidation because these indicators simply flatten along with price action. SBUX subsequently broke above the upper band, then broke resistance for confirmation.

Use these ideas to augment your trading style, risk-reward preferences and personal judgments. Signs of buying pressure or accumulation increased the chances of an upside breakout. According to John Bollinger, periods of low volatility are often followed by periods of high volatility.

Understandably, stocks with higher prices tend to have higher BandWidth readings than stocks with lower prices. Ideally, BandWidth should be near the low end of its six-month range. Bollinger Bands – From John Bollinger. A Squeeze is a tightening of the Bollinger Bands. According to John Bollinger, periods of low volatility are often followed by periods of high volatility. Conversely, if the price closes below the bottom line, it will likely continue moving downward. And the price would have resumed its rally, to your frustration.

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