Interpreting Bollinger %B as a Price-Position Oscillator
Summary
The document describes Bollinger %B, an oscillator that expresses a candle’s closing price relative to the Bollinger Bands. A reading of zero corresponds to the lower band, 50 to the moving-average basis, and 100 to the upper band. The included calculation scales the distance from the lower band by the band width, expressed as four standard deviations, to produce a percentage-like reading.
The text proposes readings above 100 and below zero as overbought and oversold signals, respectively, and suggests that divergences between the oscillator and price may offer trading opportunities. It gives no rules for entries, exits, or risk control, and presents no backtest or empirical evidence. These thresholds and divergence interpretations are indicators to investigate, not proof of a profitable strategy; the surrounding privacy notice is unrelated to the trading concept.
Key ideas
- Bollinger %B locates the close relative to the lower band, moving-average basis, and upper band.
- The stated reference readings are zero at the lower band, 50 at the basis, and 100 at the upper band.
- Readings outside the band range are presented as possible overbought or oversold signals.
- Price divergences are suggested as potential opportunities, but no trading rules or performance evidence are provided.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.