Bollinger Band Contraction Breakout Signals Using Price Percentiles

Summary

This indicator uses the position of closing, high, and low prices within Bollinger Bands to identify moves beyond the bands after a contraction. It averages the prior three high and low percentile readings, then tracks conditions above the upper band or below the lower band while the close is on the corresponding side of the band midpoint. Arrows appear when those conditions end, with their placement offset from the bar by an average true range measure.

The document provides indicator logic but no chart examples, backtest, asset universe, or performance evidence. Its signals mark the end of an excursion condition, so they may serve as exit or reversal prompts rather than validated entry rules. The description does not define the Bollinger Band settings or explain treatment of zero-width bands, and it gives no risk controls. The author presents it as an initial coding effort, so the formula should be checked before use.

Key ideas

• The indicator expresses price as a percentage of the distance between the Bollinger Bands.
• It averages three recent high and low readings to detect moves outside the bands.
• It plots arrows when an outside-band condition switches off.
• The document supplies no backtest or evidence that the signals are profitable.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.