Bollinger Bands Indicator and Price Volatility
When price volatility is high; prices close far away from the moving average, the oil Bollinger Bands width increases to accommodate more possible price action movement which can fall within 95% of the mean.
Bollinger bands indicator will widen as price volatility widens. This will show as bollinger band bulges around the price. When the oil bollinger bands widen like this it is a continuation oil pattern and price will continue moving in this direction. This is normally a continuation oil signal.
The Bollinger bands indicator example shown below illustrates the Bollinger bulge.
High Price Volatility - Crude Oil Bollinger Band Indicator - Bollinger Band Bulge
When price volatility is low: prices close closer towards the moving average, the width decreases to reduce the possible price action movement which can fall within 95% of the mean.
When price volatility is low price will start to consolidate waiting for price to breakout. When the oil bollinger bands indicator is moving sideways it is best to stay on the sidelines and not to place any crude trades.
The Bollinger bands indicator examples is shown below when the oil bollinger bands narrowed.
Low Price Volatility - Crude Oil Bollinger Band Indicator - Bollinger Bands Squeeze
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