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Readings above 1 indicate a close above the upper band, and readings below 0 indicate a close below the lower band.

As with other indicators used in this manner, the best results are observed when filtering readings with the underlying trend. Both indicators are shown in the chart below. The Bollinger Bands in this example are set at a day simple moving average and 2 standard deviations above and below the moving average. In this chart example, XYZ is in a well-defined, intermediate-term uptrend.

When price pulls back to the lower Bollinger Band, which represents a 2-standard-deviation move from the period moving average, a trader may look to buy. The analytical tools described in this article are for information purposes only and their use does not guarantee a profit. None of the information provided should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security. Investors should fully research any security before making an investment decision.

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%B Indicator [ChartSchool]

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Metastock formulas Smoothed Bollinger %b indicator SVE_BB%b

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Using Bollinger Band® "Bands" To Gauge Trends

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