The Bandwidth Gauge
Measure volatility compression and your position within the bands. Two essential readings for every Bollinger trader.
How This Works
Bandwidth measures the width of the Bollinger Bands as a percentage of the middle band. It tells you whether the market is breathing normally or holding its breath.
Bandwidth = (Upper BB − Lower BB) / Middle BB
A reading at a 6-month low signals The Squeeze — a volatility compression that typically precedes an explosive move. Sharp expansion from a narrow base suggests a trend start. Flattening after expansion warns of trend exhaustion.
%b tells you exactly where price sits within the bands. Unlike RSI, it is not bounded — it can exceed 1.0 or fall below 0.
%b = (Last Price − Lower BB) / (Upper BB − Lower BB)
Readings near 0.5 mean price is at the middle band. Readings above 1.0 or below 0 are statistical outliers that demand context from trend and volume.
Worked Example
Input: Last Price = $52.00 | Upper BB = $55.00 | Middle BB = $50.00 | Lower BB = $45.00
Bandwidth: ($55.00 − $45.00) / $50.00 = 0.20 (20%)
%b: ($52.00 − $45.00) / ($55.00 − $45.00) = 7 / 10 = 0.70
Interpretation: Bandwidth of 0.20 is moderate — not a squeeze, but not extended either. %b of 0.70 means price is 70% of the way from lower to upper band, above the middle band but not at an extreme. In an uptrend, this is a healthy pullback zone. In a downtrend, it is approaching resistance.