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Hello, and welcome to the Ninja
Trader Indicator Warehouse.
Today we're going to cover the Bollinger
Bands Squeeze Histogram.
So I would be surprised if you have not heard of John
Bollinger and his famous Band Squeeze.
But just in case, here's a quick review.
According to Bollinger, the bands are driven by
volatility.
And the squeeze is a pure reflection of that volatility.
So in a typical Bollinger Band set up, you'll see some bands
drawn within, and surrounding, the price structure of a
trading instrument.
They provide relative boundaries of highs and lows.
The crux of the Bollinger Band indicator is based on a moving
average that defines the intermediate-term trend of the
instrument, based on the trading time
frame that you're viewing--
otherwise known as the middle band.
Most of the time this defaults to a 20-period
simple moving average.
The upper bands and lower bands are then a measure of
the volatility to the upside or downside.
OK, let's show you what makes this indicator unique.
Basically instead of representing the Bollinger
Band as bands on your main chart, it creates a histogram
at the bottom or lower part of your chart.
So you can still control the period and the smooth moving
average associated with the Bollinger Bands, including the
ability to change the colors of the bars themselves below.
So the blue line that you see in the middle of the chart
below is actually the moving average of
the histogram itself.
You have a choice here of either the simple moving
average, which I just changed to two, the exponential moving
average, the whole moving average, triple moving
average, and the weighted moving average.
So let's watch this for a little bit.
You can see we're in a kind of a contracted period right now.
And you'll notice that down below
everything is rather flat.
And we're waiting to see more of a restriction or
constriction.
Notice how the histogram is getting tighter.
And let's watch it and see what happens.
We're looking for a pop.
So you can see there's already a change.
And there it is.
It starts to break through the moving average.
I can see--
there's a nice move to the upside.
And off she goes.
So I want to thank you for joining us today.
And remember, whether you are day trading the E-Mini S&P,
other futures contracts, or forex, Indicator Warehouse
will help you get more profit from your online training and
technical analysis efforts.
Thank you.