This indicator is a compliment to Exponential Deviation Bands. It is the difference between the upper and the lower bands divided by the middle band. It is an easy way to visualize consolidation before price movements or periods of higher volatility.
How it works During a period of high volatility, the distance between the two bands will widen and Exponential Deviation Bands width will increase. And the opposite occurs during a period of low volatility, the distance between the two bands will contract and Exponential Deviation Bands width will decrease. Meaning there is a tendency for bands to alternate between expansion and contraction.
When the bands are relatively far apart, that is often is a sign that the current trend is ending. When the distance between the two bands is relatively narrow that often is a sign that the market is about to initiate a bigger move in either direction.