Figure 2: Bollinger Squeeze and Subsequent Bullish Breakout

During the period of January 2007 to March 2007, the big gap between the upper and lower bands shows that Hyflux was trading with high volatility. However in Apr 2007, Hyflux started trading sideways and as a result, the upper and lower bands contracted and squeezed together, indicating the occurrence of the Bollinger Squeeze. A Bollinger breakout then happened when both bands suddenly diverged with the price hugging the upper band thereby triggering a bullish signal. The reverse is true for a breakout to the downside. This is illustrated in Figure 3 where a Bollinger Squeeze was formed in April 2007 with the subsequent bearish breakout happening on 23^rd of April 2007.