High Low Bands
Last updated
Last updated
© StockCharts.com, Inc. All Rights Reserved.
The High Low Bands (HLB) indicator helps traders identify and analyze price trends and volatility. It's made up of three lines: an upper band, a middle band, and a lower band. HLB is based on the triangular moving average—a “smoothed” moving average using a particular calculation that gives greater weight to the most recent price data.
Three lines are derived from this triangular moving average—one above and one below the original average, which appears in the middle. The distance between the upper and lower bands from the middle band is adjusted by a specific percentage according to your preference. The StockChartsACP’s default HLB percentage is set to 5.
There are several ways in which you can interpret High Low Bands.
Trend Direction. If the price consistently touches or exceeds the upper band, the indicator suggests a strong uptrend. Conversely, if the price persistently touches or falls below the lower band, it indicates a strong downtrend.
Overbought/Oversold Conditions. Prices near the upper band might indicate an overbought condition. Prices near the lower band might indicate an oversold condition. It’s best to check these readings with other indicators that interpret potential overbought/oversold readings (such as the Relative Strength Index or the Stochastic Oscillator).
Support and Resistance. The upper and lower bands can sometimes serve as dynamic support and resistance levels, with the middle band serving as a mean reversion level toward which prices may gravitate.
Volatility. Although the bands don't dynamically adjust to volatility like Bollinger Bands, High Low Bands can still be a visual reference to gauge price volatility.
