Bollinger Bands With Stochastic – Overbought, Oversold Reversal Strategy

 Bollinger Bands with Stochastic is a classic strategy that is based on the principle of returning to the average price when it comes out of the Bollinger Bands and at the same time the Stochastic is also in an overbought or oversold situation. This strategy is simple and effective, suitable for all time frames.

Setup strategy

Time Frame 5 minutes or higher.

Currency pairs: It is recommended to use synthetic currency pairs because they lateralize a lot with zigzag movements. EURGBP, AUDNZD, EURCHF, AUDCHF and others.

Platform: all

Profitability:high.

Type: Reversal Strategy

Style: Day Trading and Swing trading.

Indicators:

Bollinger Bands (period 25, deviation 2.0).

Stochastic oscillator ( 14, 8, 3).

Trading rules Bollinger Bands With Stochastic

Principle: price when it comes out of the Bollinger Bands and at the same time the Stochastic is also in an overbought or oversold situation.

Buy

The price closes outside the lower band. Stochastic is oversold below the 25 level.
Buy when the Slow Stochastic crosses up.

Sell

The price closes outside the upper band. Stochastic is overbought above the the 75 level.
Sell when the Slow Stochastic crosses down.

Exit position

Exit at the middle or opposite band. Place initial stop loss belo/above the previous swing High/low.

Examples of trades.