Bollinger %b Indicator

Bollinger %b is described by John Bollinger on his website. It indicates the position of Closing Price relative to Bollinger Bands® plotted at 2 standard deviations around a 20-Day simple moving average.

Bollinger %b Trading Signals

Bollinger %b can be used in a trending or ranging market.

Trending Market

• Go long if a retracement records a negative number on %b (i.e. price has closed below the lower Bollinger Band) and is followed by a second retracement where %b remains positive.
• Go short if a rally records a value above 100 for %b (the upper Bollinger Band) and is followed by a second rally where %b remains below 100.

Use failure swings on Welles Wilder's Relative Strength Index to confirm the signals.

Example

Goldman Sachs is displayed with 20-day Bollinger %b.

Mouse over chart captions to display trading signals.

1. Go long [L] when a retracement on Bollinger %b respects the zero line after the previous retracement was below zero.
2. Exit [X] when a rally on Bollinger %b falls short of 100 after the previous rally exceeded 100.
3. Go long [L] when the retracement on Bollinger %b reverses while above zero after the previous retracement reached zero.
4. Exit [X] after another bearish divergence on Bollinger %b, from above to below 100.

Setup

The default setting for Bollinger %b is a 20-Day simple moving average with bands drawn at 2 standard deviations.

See Indicator Panel for directions on how to set up an indicator — and Edit Indicator Settings to change the settings.

Bollinger %b Formula

Bollinger %b = (Closing Price - Lower Band) / (Upper Band - Lower Band).