SPX update: 2 year bollinger bandwidth study

Going back two years in time, I looked at “bollinger bandwidth peaks” and how price fared after those. Namely, BB-width peaked on Friday as it has turned down today. Once it turns down, it continues down, no exceptions.

(click to enlarge)

2yr BB-width study 11102014

I found 10 prior instances where this happened. Of those 10, there were 4 instances with a similar set-up: BB-width double-peaked with a prior BB-width high due to a prior (important) price low (blue lines). Those occasions are marked with the black accolades on top, and the numbers 1 through 4. The other 2 “BB-width double peaks” are not really peaks, but a broad flat pattern and therefore excluded. This study shows that once BB-width peaks a 2nd time (red line), after a deep retrace of the prior up move (blue line), price in 3 occasions will make first a higher high subsequently, before (see red arrows)

  • retracing most of the advance (after 1, and 2),
  • retracing about 50% of the advance  (3)
  • retracing all of the advance (4)

Of course, since this is an uptrend, these declines are all eventually regained again…. 😉

Hence, based on this study, chances are highest that after a marginal higher high we’ll see a ~60-70% retrace of the recent advance off the 1821 low, with an equal chance of a 50% to 100+% retrace, which should then be followed by new ATHs!


3 thoughts on “SPX update: 2 year bollinger bandwidth study

  1. Pingback: WLSH update; how to make boring interesting? Then vs. now vs. market breadth | Intelligent Investing

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