Bollinger %b

The Bollinger %b indicator, developed by John A. Bollinger, indicates the position of the closing price relative to the Bollinger Bands. It clearly signals oversold and overbought levels.

Calculation Method

Bollinger %b = 100 * (C - BL)/ (BH - BL)

where:

• C: The closing price
• BH: The upper Bollinger Band
• BL: The lower Bollinger Band

Example

Interpretation

When the indicator is near zero or has a negative value, the price is near or below the lower band. This may signal a bullish trend reversal.

When the indicator is near 100% or above, the price is near or above the upper band. This may signal a bearish trend reversal.

When the indicator is near 50%, the price is near the moving average.

The levels 0% and 100% can be used respectively as oversold or overbought thresholds.