Prices at the upper Bollinger band are considered high and prices at the lower Bollinger band are considered low. However, just because prices have hit the upper Bollinger does not necessarily mean that it is a good time to sell. Therefore, just buying at the lower band and selling at the upper band is out of the question. By definition, price makes new highs in an uptrend and new lows in a downtrend, which means that they will naturally be hitting the bands. With this information in mind, our filter will require that buy signals occur only if the candle following the one that hits the Lower Bollinger band does not make a new low (white candle) and sell signals occur only if the candle following the one that hits the Higher Bollinger band does not make a new high (black candle). This type of candle is commonly known as an inside day. The best time frames to look for the inside days are daily charts, but this strategy can also be used on hourly, weekly and monthly charts. Combining inside days with Bollinger bands increases the likelihood that we are only picking a top or bottom after prices have hit extreme levels. As a rule of thumb, the longer the time frame, the rarer the trade will be, but the signal will also be more significant.
For Buy
1. Look for the currency pair to hit or come very close to hitting the lower Bollinger.
2. Wait for next candle and make sure that the next candle's low is greater than or equal to the previous candle's low and that the high is also less than or equal to the previous period's high. Basically it should be within the previous candle high and low. Also make sure the candle is while candle. If so, go long at the open of the third candle.
3. The initial stop is placed a few pips below the previous candle's low.
4. Trail stop on a closing basis with the 20-period SMA.
For Sell
1. Look for the currency pair to hit or come very close to hitting the upper Bollinger.
2. Wait for next candle and make sure that the next candle's high is less than or equal to the previous candle's high and that the low is also greater than or equal to the previous period's low. Basically it should be within the previous candle high and low. Also make sure the candle is while candle . If so, go short at the open of the third candle.
3. The initial stop is placed a few pips above the previous candle's high.
4. Trail stop on a closing basis with the 20-period SMA.
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Oleh
Piratebay
