BOLLINGER SQUEEZE
Bollinger Squeeze is a trade
setup by John Bollinger, using his very own Bollinger Bands.
Bollinger Bands is a channel
formed by two vertically displaced moving averages: one displaced upwards by
two standard deviations and one displaced downwards by two standard deviations.
The typical parameters refer to a simple moving average and standard deviation
based on 20 periods.
Bandwidth is the width of the
Bollinger Bands. A decreasing Bandwidth shows decreasing volatility and an
increasing Bandwidth shows increasing volatility. Bollinger Squeeze setup uses
decreasing Bandwidth (the Squeeze) to find periods of low volatility and trades
price breakouts from sluggish price action.
