• The percentile Bollinger is a technical indicator which uses Bollinger bands to analyse the stock market. The closing price of each session is reflected as a percentage of the upper and lower band value .

This is the 1 day chart of Maruti Suzuki India around Jan-Aug, 2020

Formula for percentile B:

1. %B = ( (Closing price – Lower band)/(Upper band – Lower band)) * 100

• If the closing price is equal to the lower band, then %B = 0
• If the closing price is equal to the upper band, then %B = 100%
• If the closing price is equal to the SMA, then %B = 50%
• If the closing price is lower than the lower band, then %B < 0
• If the closing price is higher than the upper band, then %B > 100%

• Whenever there is an upward trend, traders need to wait for the %B value to exceed 100% because a value above 100% indicates that the stock is overbought.
• As soon as the %B value crosses 100%, it indicates a potential downward trend and traders can go short in the rally. Existing traders can exit their long positions and initiate long unwinding.
• Similarly, whenever there is a downward trend, traders need to wait for the %B value to fall below 0 because a value below 0 indicates that the stock is oversold.
• As soon as the %B value goes below 0, it indicates a potential upward trend and traders can go long in the rally. Existing traders can exit their short positions and initiate short covering.