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A Technical Approach To Trend Analysis: Practical Trade Timing for Enhanced Profits by Michael C. Thomsett

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The Bollinger Squeeze

The tendency for breadth of trading to narrow as consolidation ends is a variation of the triangle. These continuation signals in their various forms (ascending or bullish, descending or bearish, and symmetrical, either bullish or bearish) are versions of narrowing breadth; however, these patterns are more often seen in uptrends and downtrends.

In a similar way, the pennant is a short-term symmetrical triangle that may reflect coming reversal or merely a retracement of the current trend. However, pennants (and flags) are not associated as much with consolidation trends. One form of this narrowing tendency that often leads to strong breakout signals is the Bollinger Squeeze.

Key Point

Narrowing breadth often is a key to ...

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