Constructing a Bollinger Band indicator suite

A shared baseline, then separate questions

A Bollinger Band suite can be grouped into bands or envelopes plus separate families of indicators that focus on price action, volatility, and trend. The shared object is a volatility envelope around a moving average of price. That envelope is the baseline for related location, momentum, and width readings.

The construction job is to keep that baseline fixed, then attach each derived reading to one question. Location, impulse, momentum, and expansion should not collapse into a single overlay.

Middle line and volatility width

After the session choice, the envelope needs a middle average and a volatility width. One explicit construction uses a 20-period simple average of the close as the middle line and two standard deviations of the close to place the upper and lower lines.

That pair is enough to support the later readings. Percent b needs the envelope in order to place price. BandWidth needs the same upper and lower lines in order to measure how far they stand apart.

Location relative to the envelope

Percent b is presented as the first Bollinger Band indicator. It is constructed to locate price relative to the bands. As a location reading, it places the current price inside or outside the constructed envelope.

Impulse, momentum, and a one-period predecessor

Price-action readings stay attached to the same envelope. BBImpulse is specified as instantaneous price action relative to the bands. BBMomentum asks what momentum is doing relative to that envelope. A single-period predecessor of the momentum reading is identified as BBDelta.

In the explicit middle-line construction, band momentum is the 10-period close-to-close change divided by the distance between the upper and lower lines, then plotted as a histogram.

Width, expansion, and history

BandWidth is presented as the second Bollinger Band indicator. It asks how wide the bands are. As a width reading, it measures how far the upper and lower lines stand apart.

Two companion width readings keep that question from mixing with location. BandWidth Delta asks whether the bands are expanding or contracting. Percent BandWidth asks where current width sits versus its history.

Whether prices are trending

BBTrend belongs to the trend family. It is specified to ask whether prices are trending and, if so, in what direction. That question stays separate from where price sits in the envelope and from how wide the envelope is.