Bollinger Bands EMA, MACD and RSI

Bollinger Bands with EMA,MACD and RSI is a strategy based on Bollinger Bands filtered by MACD and RSI, this trading system is suitable at any time frame.

System Components & Indicators Timeframe:

All timeframes Currency Pairs: Major pairs such as the EUR/USD and the GBP/USD. Indicators:

1. Bollinger Bands (20,3)
2. 3 period Exponential Moving Average (EMA)
3. 3. Moving Average Convergence Divergence (MACD) - 6,17,1 4.
4. 14 period Relative Strength Index (RSI)

Long Entry Rules

1. The 3 period EMA must cross above the Middle Bollinger Band. 2. The MACD must cross above the 0 level. 3. The 14 period RSI must cross above the 50 level. 4. When all the conditions above are met, place a buy order. 5. Set the Stop Loss a few pips below the nearest swing low or the Lower Bollinger Band, whichever is closer. 6. Set the Take Profit at the Upper Bollinger Band or use a fixed profit target, depending on the timeframe you are trading. Here are some examples of fixed Take Profit targets in pips for each timeframe: M1 (1 minute): 3-5 pips M5 (5 minute): 5-10 pips M15 (15 minutes): 15-20 pips M30 (30 minutes): 25-30 pips H1 (1 hour): 40-60 pips H4 (4 hours): 80-100 pips D1 (Daily): 150-200 pips. 

Above, we have long trade taken on GBP/JPY H4 chart along the vertical line (A). Prior to the entry, when the RSI crossed above the 50 level, we got the first sign to start looking for long trade. The MACD also crossed above the 0 level. A few candles later the 3 EMA crossed above the Middle Bollinger Band. After the close of the current set up candle, a long position was opened at 126.283 (B). Then, a Stop Loss of 80 pips under the entry was set, just below the last swing low point at 125.483 (C). Next, a Take Profit Target of 100 pips was set at 127.283 (D), which was hit right at the very next candle. Now let’s take a look at Short trade conditions.

Short Entry Rules

1. The 3 period EMA must cross under the Middle Bollinger Band. 2. The MACD must fall below the 0 level. 3. The 14 period RSI must move below the 50 level. 4. When all the conditions above are met, place a sell order. 5. Set the Stop Loss a few pips above the nearest swing high or the Upper Bollinger Band, whichever is closer. 6. Set the Take Profit at the Lower Bollinger Band or a fixed target, depending on the timeframe you are trading.

Here, we have a short trade on the EUR/USD H1 chart, along the vertical line (A). First, the RSI crossed below the 50 level and almost simultaneously, the 3 EMA crossed below the Middle Bollinger Band. The last signal was given by the MACD when it fell under the 0 level. Immediately after the close of the setup candle, a short trade was placed at 1.30512 (B). Next, a Stop Loss of 15 pips above the entry was set, at 1.30662, which is just above the last swing high (C). And then, a Take Profit of 40 pips was set at 1.30112 (D). As you can see, the Take Profit was hit 4 hours later.