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Bollinger Band Width by Alberto Torchio
Bollinger Band Width

John Bollinger describes BWI (Band Width Indicator) as the width of the bands divided by the average of the price:

Band Width Indicator

4*(std(C,20))/mov(C,20,S)

 

I don't know if adding the moving average changes the usefulness of the prospecting; anyway, this is what Bollinger is suggesting.
 
I have written a MetaStock exploration to spot stocks whose BWI has reached extreme low readings. This shows when the BWI is at lower than its highest level for the last 250 days, divided by 3:

 


Band Width Indicator HHV

hhv(4*(std(C,20))/mov(C,20,S),250)/3

 

e-w-Bollinger_Band_Width.gif
The stocks that pass this screening are usually in a non-trending mood, or rather in an horizontal trend where the Bollinger Bands normally represent support and resistance levels. Otherwise, there are cases where the stock is just pausing before resuming a trend. In this second case the BWI doesn't remain under the trigger level for a long time.

A further remark is that when the stock enters a low-BWI period, it is often retesting a
previous support or resistance level.

Although I think BWI extreme lows are an interesting way to find low risk / low volatility stocks, they don't give any clue as of the direction ofthe following move.

from Alberto Torchio
Source / From: TOP
http://www.guppytraders.com

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