Percentile Rank of Bollinger Bands

23 Sep 2022

This simple indicator provides you three useful information with Bollinger Bands:

• How wide the current width (standard deviation) of the Bollinger Band is.
  
• Compared to the widths in the past, is the current width relatively small or big? Value is expressed in percentile format.
  
• What the "relative position of current price" to the current Bollinger Band is.
  

This indicator can be useful to identify whether the Bollinger Band has substantially "expanded" or "squeezed."

First, divide the current standard deviation by the current price, we get the current width. The current width is displayed by the columns at the bottom. When the current width becomes wider, the column becomes taller, and the color is dark green. On the contrary, if the width becomes narrower, the column becomes shorter and the color is light green.

Next, compare the current width with the previous N widths, we get the percentile rank for the current width. The percentile rank is shown by the thicker line graph. When the percentile rank grows, it is green; whereas when the rank declines, the color is red.

Lastly, calculate (close - lower)/(upper - lower) and we get an idea of the relative height of the current price, compared to the upper and lower band. This is displayed by the thinner line graph. When the relative position becomes higher, the color is in aqua. It is in blue when the relative position becomes lower. Note that since closing prices can go above the upper band or go below the lower band, the values may be greater than 100 or less than 0.

23 Sep 2022

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