SFX Algo Volatility Bands

The Volatility Bands are an exclusive overlay that can be toggled on in the overlays section of the indicator settings. The bands dynamically adjust to market conditions, expanding during high volatility and contracting during low volatility.

Volatility Bands Usage

The condition of the volatility bands can help you find favorable market conditions to trade in and avoid periods of low volatility.

Tight Bands

When the volatility bands are tight, or the upper and lower bands are close to each other, the market is not volatile. During periods of low volatility, it’s common for price to consolidate or move sideways. An early indication of a large price move can occur when the bands widen or open up after being tight.

Wide Bands

When the volatility bands are wide, it reflects a period of increased volatility, typically during strong price trends or after a breakout.

Support & Resistance

The volatility bands can also act as support and resistance areas. The upper band acts as resistance while the lower band acts as support. These mark out good areas for potential reversals. Breakouts can also occur when price moves beyond the bands, signaling a potential trend in the breakout direction.