Indicator - Bollinger %b
-
- 0
- 1035
- 0
Definition Bollinger %b
Bollinger %b is a bounded indicator which is based on Bollinger bands.
Calculation Bollinger %b
%b = (Close - Lower Band) / (Upper Band - Lower band)
If price crosses the upper Bollinger band, this indicator will equal to 100. Inversely, it will equal zero when price crosses the lower band. In cases where price moves further away from the limits of the Bollinger band, it will have values higher than 100 or lower than zero.
Interpretation Bollinger %b
The higher the indicator is, the more we can consider that the instrument is overbought and that its price may fall in the short term.
The lower the indicator is, the more likely will be oversold and its price may go up in the short term.
These levels are commonly considered to be:
- overbought: %b > 80
- oversold: %b < 20
It is advise to adjust these levels with the volatility of the instrument where the indicator is applied.
