Bollinger Bandwidth
Measures the percentage width of Bollinger Bands relative to the middle band; extreme lows signal a volatility squeeze preceding a large move.
BBW = (Upper Band − Lower Band) / Middle Band × 100
Bollinger Bandwidth quantifies how wide the Bollinger Bands are relative to the 20-period SMA: (Upper − Lower) / Middle × 100. It transforms the visual "squeeze" into a numeric signal.
When Bandwidth falls to a multi-month or multi-year low, a Bollinger Squeeze is confirmed. The lower the Bandwidth, the more compressed the range, and the more explosive the eventual breakout tends to be. Bandwidth alone does not indicate direction — traders typically overlay a breakout rule (e.g. price closes above the upper band after the squeeze) or use a momentum filter to determine which way to trade.