Bollinger Bands %B Bollinger Bands - Version 2

The Bollinger Bands %B Bollinger Bands indicator applies the Bollinger Bands algorithm to the %B oscillator to identify extreme price movements and potential reversal points. By calculating bands on the %B value itself, it provides a secondary layer of volatility analysis to pinpoint overbought and oversold conditions relative to historical volatility.

Usage

The indicator can be used to identify trend exhaustion or potential breakout points. When the %B line (the main oscillator) crosses outside of its own Bollinger Bands, it signals an extreme deviation from the mean:

• Bullish Signal: When the %B value drops below its lower band, a "B" character appears at the bottom of the chart, suggesting an oversold condition.
• Bearish Signal: When the %B value rises above its upper band, an "S" character appears at the top of the chart, suggesting an overbought condition.
• Neutral State: When the %B line stays within the bands, the background is highlighted in gray, indicating a lack of extreme volatility or trend direction.

Details

The script follows a two-step calculation process. First, it calculates the standard Bollinger Bands %B, which represents where the current price sits relative to its Bollinger Bands (0 being the lower band and 1 being the upper band). Second, it applies a new set of Bollinger Bands calculation (SMA and Standard Deviation) directly to that %B value. This derivative approach helps filter out noise and identifies when the %B oscillator itself is reaching a statistical extreme, often leading to more precise signals than looking at %B in isolation.

Settings

• Length: The lookback period used for both the initial %B calculation and the subsequent Bollinger Bands applied to the %B value.
• Mult: The standard deviation multiplier that determines the width of the bands. Increasing this will result in fewer, more selective signals.

FAQ

How do I interpret the 'S' and 'B' labels?

The 'S' label indicates a potential sell or shorting opportunity as the %B has exceeded its upper band, while the 'B' label indicates a potential buy or long opportunity as the %B has fallen below its lower band.

Can this indicator be used on any timeframe?

Yes, the Bollinger Bands %B Bollinger Bands tool is applicable to any timeframe, though its effectiveness may vary depending on the volatility of the specific asset and the chosen length settings.

How can I access Bollinger Bands %B Bollinger Bands?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.