Three Bollinger Bands trading system is a reversal strategy for intraday and swing trading.
When the RSI hits either an overbought or oversold level, this signals to us that we can start looking for a possible reversal. However, rather than just immediately buying in hopes for a trend reversal based solely upon RSI, we add in three models of Bollinger bands ( with differents deviation 1,2,3,) to help us identify the point of exhaustion. The reason why we utilize three sets of Bollinger bands is because it helps us to evaluate the extremity of the move along with the extent of the probable inversion of the trend.
Best Time Frame 1H H4, H6.
Markets Forex and Indicies.
Indicators
Bollinger Bands (20,1);
Bollinger Band (20, 2);
Bollinger Bands (20,3).
RSI 14 period (ovesold zone below 30 level, Overbougt Zone above 70 level)
Long Entry
1) RSI (14 period ) below of 30 level.
2) Watch for the price to hit the lower band of the Bollinger Bands (20, 3).
3) Wait for the price to move from the Bollinger Bands 3SD and Bollinger Bands (20, 2) area into the BB (20,2)-(BB (20-1) area
4) After one candle closes fully within the BB (20,2)-(BB (20-1) area, buy at market at opening of the next candle.
5) Place initial stop at swing low minus 10 pips (h1 time frame) minus 20 pips (h4 Time frame), move stop loss at the entry price at first profit target.
6) First profit target target is ratio 1:1 stop loss.
7) Second Profit target is tag of the second upper band of the BB (20,2).
Short Entry
1) RSI (14 period ) above of 70 level.
2) Watch for the price to hit the upper band of Bollinger Bands (20, 3).
3) Wait for the price to move from the Bollinger Bands 3SD and Bollinger Bands (20, 2) area, into the BB (20,2)-(BB (20-1) area
4) After one candle closes fully within the BB (20,2)-(BB (20-1) area, sell at market at opening of the next candle.
5) Place initial stop at swing high minus 10 pips (h1 time frame), minus 20 pips (h4 Time frame), move stop loss at the entry price at first profit target.
6) First profit target target is ratio 1:1 stop loss.
7) Second Profit target is tag of the second upper band of the BB (20,2).
The 1° example EUR/USD.
Step 1:
Price hits 3 BB (20, 3) lower band and RSI drops below 30 level.
Step 2
Candles moves into BB (20:2) and BB (20:1) zone buy at 1.1884.
Step 3:
Exit 1/ at 1.1906 move stop to breakeven.
Step 4
Exit second ½ at 1.1939 ( +55 pips).
The 2° Example NZD/USD
Price hits 3 BB (20, 3) lower band and RSI drops below 30 level.
Step 2
Candles moves into BB (20:2) and BB (20:1) zone buy at 0.6583.
Step 3:
Exit 1/ at 0.6598 move stop to breakeven.
Step 4
Exit second ½ at 0.6605 ( +19 pips).
The 3° Example USD/JPY
Step 1
Price hits 3 BB (20, 3) upper band and RSI drops above 70 level.
Step 2
Candles moves into BB (20:2) and BB (20:1) zone sell at 119.03
Step 3:
Exit ½ at 118.93 move stop to breakeven.
Step 4
Exit second ½ at 118.00 ( +23 pips).
The 4° Example GBP/USD
Step 1
Price hits 3 BB (20, 3) upper band and RSI drops above 70 level.
Step 2
Candles moves into BB (20:2) and BB (20:1) zone sell at 1.7569
Step 3:
Exit ½ at 1.7544 move stop to breakeven.
Step 4
Exit second ½ at 1.7527 ( +23 pips).
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Three Bollinger Bands Trading System |
The V° Example GBP/JPY ( in this example the trade did not end up in a profit).
Step 1
Price hits 3 BB (20, 3) upper band and RSI drops below 30 level.
Step 2
Candles moves into BB (20:2) and BB (20:1) zone buy at 204.52
Step 3:
Stopped out at 204.34 (-18 pips)
Three Bollinger Bands Trading System Quiz
Three Bollinger Bands Trading System Quiz
Three Bollinger Bands Trading System
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