BBWP
Bollinger Band Width Percentile
Bollinger Band Width Percentile
Look for extreme reads, either into the red zone (extremely expanded, high volatility, >90%) or blue zone (extremely contracted, low volatility, <10%). If red → expect contraction to follow, If blue → expect expansion to follow.
REMEMBER THAT VOLATILITY IS DIRECTION NEUTRAL
If the BBWP prints extreme high volatility reads ( or red vertical bars >98%) expect some local bottom/high in or at least some sideways/consolidation as contraction is more probable. If these red prints come after an upside move → local top closer or sideways first before continuation of the trend. If these red prints come after a downside move → local bottom closer or sideways first before continuation of the trend.
On the other hand If the BBWP prints extreme low volatility reads (or blue vertical bars <2%) expect some move soon as the consolidation is probably really mature at this point. Looking for a trending move to follow.
The lower de BBWP goes the healthier the consolidation is.
One easy way to trade with this indicator is by marking the highs and lows of the formed range and wait for the expansion + breakout/down of the range to trade the continuation of the trend.
Tip: You can use the slope of the moving average [(MA) the white line] to confirm whether it is an expansion or contraction phase. When BBWP is below the MA + negative slope on the MA → contraction phase. When BBWP is above the MA + positive slope on the MA → expansion phase.
Really good indicator when you use it in confluence with EMAs, stochastics/momentum oscillators (RSI for example) and ranges. Good in any time frame.
Link to indicator on TradingView:
