Bollinger Band Histogram Karnish

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August 11, 2016
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Bollinger Band Histogram Karnish

Recently,
the “group” was able to supply me with the formula for making
a Histogram out of the “bands”. I find this the most useful
application of Bollinger’s formula. The following is the
picture I draw:

((C+2*Std(C,20) – Mov(C,20,S)) / (4*Std(C,20)))*4 – 2

Under “properties”, I then drop in +2 and -2 (because I’m
not bright enough to program them in permanently). I think
this is a much better view of the bands. As the price moves
up and down as a % of the band width, all the classic applications
of other “oscillator type” indicators work well (divergence,
support/resistance, and overbought/oversold conditions when
the price exceeds the Standard Dev. of +/-2).

This is just one of ten indicators that I use … but, for
traders trying to understand Bollinger’s “envelopes”, I
think this reconfiguration gives a simpler, cleaner view
which allows the technician to analyse the underlying issue
without the “squiggles”.