📊 TECHNICAL
Bollinger Band Width
Measures the distance between the upper and lower Bollinger Bands relative to the middle band, giving a clean read on expanding or contracting volatility and squeeze setups.
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Live Demo — Bollinger Band Width applied to NIFTY 50 (illustrative)
PriceEMA(9)EMA(21)SMA(20)
What is Bollinger Band Width?
BBW isolates the volatility information embedded in Bollinger Bands. Since bands widen as volatility rises and narrow as it falls, BBW converts that widening/narrowing into a single line, making low-volatility squeezes easy to spot.
Formula
BBW = (Upper Band - Lower Band) / Middle BandParameters
| Parameter | Default | Description |
|---|---|---|
| Period (N) | 20 | Lookback for the SMA and standard deviation |
| Std Dev Multiplier (K) | 2.0 | Width multiplier applied to the standard deviation |
Signal Interpretation
- A multi-period low in BBW (the squeeze) often precedes an expansion move.
- A sharp rise confirms volatility is expanding, typically alongside a breakout.
- BBW falling back toward recent lows after a big move suggests the trend is losing momentum.
- Comparing current BBW to its own historical range is more useful than reading the absolute value.
- BBW carries no directional bias — only magnitude.
Tips & Best Practices
- Use squeezes as a watchlist filter, then confirm breakout direction with price/volume.
- Comparable across different-priced instruments since it's a ratio.
- Avoid trading expansion alone; false breakouts from a squeeze are common without volume confirmation.