With this strategy, we recommend using a pip stop. Bollinger Bands are one of the most common volatility indicators used in technical stock market analysis. Below we visualized several short and long trades, based on the above mentioned trading approach. Suppose instead the price chart shows trading is reaching the lower Bollinger Band and the RSI is not under Tap here for another RSI trading strategy article These indicators should come standard on your trading platform. The relative momentum indicator goes above 50 when the magnitude of the recent gains exceeds the magnitude of recent losses. Best trading approach and warnings If the financial instrument rises above the average 50, but it is still in a declining channel, it may return below the average because the market structure not price pattern is still bearish.
Bollinger + RSI, Double Strategy (by ChartArt) — trading strategy by ChartArt (). TradingView — best trading algos and expert opinions on a financial platform!
Combining the Relative Strength Index and Bollinger Bands
The indicator RSI is an oscillator, and therefore it oscillates in a certain zone, limited by the maximum and minimum values. The index of Relative Strength is set on a scale from 0 to It works best, reaching areas of extremes. The criterion for evaluation is two lines drawn at the level of 30 and It is believed that overbought zone is above 70, and below 30 is oversold.
Therefore, when the value of the Relative Strength Index reaches and rises above 70, there is a threat of a drop in prices; movement below 30 is perceived as a warning of a near rise. Some analysts advise accepting 30 and 70 levels as boundaries only with side trends, and 20 and 80 with clearly expressed bullish and bearish.
Of course, exceeding levels 30 and 70 does not mean that you need to immediately begin making deals. After all, the market may be in a state of overbought and oversold for a long time, and the oscillator, warning about a change in the trend in advance, does not explain when exactly this can happen. Many traders do not like classical indicators and even indicators in principle. I believe that they simply do not know how to cook them.
The currency is in an uptrend and then it will pull back to the lower Bollinger Band. From there, if it follows the rules, we will execute a trade. Finding a trending market is very simple. You can use channels, trend lines, Fibonacci lines, to determine a trend. Find higher highs or lower lows and place a trend line on them. If the line is going up it is an uptrend, if its going down, it is a downtrend.
It needs to be trending up or down, not a sideways trend. As you can see in the example that price came all the way back down, from the uptrend, and touched the bottom band. The price hit the Bollinger band, the RSI when the price touches the bottom band needs to be in between 50 and You want to see the RSI go up, in this case, in the direction of the trade.
Remember that it should be in between the mark. In a sell trade the RSI would need to be in between the mark and going downward. You need to see that the trend is moving upwards, in this case, before you enter a trade. If the candlesticks are moving to a point where it is making a new low, this would not be a good time to enter a trade.
However, once the candles fail to make a new a low watch to see if it forms a bullish formation. Here is an example of master candle setup. In this example, I bumped down to a one hour chart to make an entry. This is perfectly fine to do. This could give you a more accurate place to make an entry point. As I said, the 4 hour and 1-minute time frames are the preferred time frames for this strategy.
Yes, there is less of an opportunity for a trade, but the signals are very strong when you are in a higher time frame. Always remember to be placing a stop loss, and having a good target area. With this strategy, we recommend using a pip stop. The Bollinger bands are a great indicator to use in any market.
When you combine these with the RSI indicator, it should give you great entry points. Here is another strategy called trading volume in forex. Something else you can consider is when the price touches the middle band you can make a second entry to press your winners.
This can potentially give you double the profit. With this strategy, we only use the one trade that we initially make, but if your rules allow you to make multiple trades at a time with the same currency pair, then adding a second position at the middle line may be something you would want to consider.
Tap here to read another great trading strategy! This one requires no indicators, just pure price action! Please leave a comment below if you have any questions about Bollinger Bands Bounce Strategy! Grab the Free PDF Strategy Report that includes other helpful information like more details, more chart images, and many other examples of this strategy in action!
Please Share this Strategy Below and keep it for your own personal use! Something that will look like this: How to use Bollinger band indicator Bollinger Bands are well known in the trading community. Tap here for another RSI trading strategy article These indicators should come standard on your trading platform. The currency must fall back from the uptrend and touch, or almost touches, the bottom band.
The indicator we will be using is the Relative Strength Index (RSI) (with its period set to 14, overbought level - 70, oversold level - 30), while we will also apply the Bollinger Band (with its default settings). Bollinger Bands are one of the most common volatility indicators used in technical stock market analysis. The bands plot three separate lines on a price chart, with the outer two representing a. Dec 29, · In this article today, you will find how to use Bollinger bands in day trading that uses two of the most popular trading indicators on the market (the Bollinger Bands and the Rsi indicator) to simply find a price “bounce” that occurs during the main trend/5(6).