Looking for Volatility Contractions

Arthur Hill
by Arthur Hill,
Chief Technical Strategist, TrendInvestorPro.com

Volatility contractions often precede volatility expansions. This is the rational behind Bollinger Bands. After surging above 5.5, Ford (F) formed a long consolidation and Bollinger Bands contracted as the range narrowed. The subsequent move above resistance and the upper Bollinger Band triggered the volatility expansion (breakout). Note: This is an educational post featuring a technical analysis technique.

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Click on this chart to see more details.

To find stocks with narrowing Bollinger Bands, use the Market Carpet tool and select Bollinger Band width.

Arthur Hill
About The Author:

Arthur is Chief Technical Strategist at TrendInvestorPro.com. Focused primarily on US equities and ETFs, his systematic approach of identifying trend, finding signals within and setting key price levels has made him an industry-leading technician. Learn More 

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