The Bollinger Band
is a popular indicator due to it's ability
to accurately predict future ranges based on prior volatility
. However the bands can fluctuate wildly as a result of acute changes to the price. This results in a channel that is sensitive though replete with sharp
angles. Replacing the simple moving average
basis line with a Tillson T3 moving average
results in a smoother albeit slower basis line. Deriving the bands from partially smoothed data results in more continuous bands than those of the original equation.