5 minute scalping Overbought and Oversold with Bollinger Bands and RSI

5 minute scalping with Overbought and Oversold is a momentum trading system based on Bollinger Bands and Relative Strength Index

Strategy Setup

Indicators:

Bollinger Bands: Period 25, Standard Deviation 2.0

RSI: 14 periods, with MA 11 periods

Time Frame: 5-minute chart or higher.

Trading Sessions: Berlin

Currency Pairs: EURUSD, EURGBP, AUDNZD.

Entry Conditions

Buy

Price Action: The price must close outside the lower Bollinger Band.

RSI Condition: The RSI must be below 30.

Sell

Price Action: The price must close outside the upper Bollinger Band.

RSI Condition: The RSI must be above 70.

Exit Conditions

Stop Loss

Set the stop loss at 5 pips or at the upper/lower Bollinger Bands, which ever is closer.

Profit Target

Set the profit target at 3-4 pips or at the middle Bollinger Band, whichever is reached first.

Additional Rules

Avoid Trading Before Major News Releases:

Refrain from entering trades shortly before significant economic announcements, as they can cause unpredictable market movements.

Trend Confirmation

Downtrend: Do not enter a buy position until the price has penetrated the center line of the Bollinger Bands upwards, indicating the potential end of the downtrend.

Uptrend: Do not enter a sell position until the price has penetrated the center line of the Bollinger Bands downwards, indicating the potential end of the uptrend.

Example Strategy Implementation

Identify Trading Sessions:

Ensure you are trading within the specified time frames (2am-5am, 8am-12pm, 7:30pm-10pm EST).

Monitor Bollinger Bands and RSI:

Set up Bollinger Bands with a period of 25 and a standard deviation of 2.0.

Set up the RSI with a period of 14 and a moving average of 11 periods.

Look for Buy Signals:

If the price closes outside the lower Bollinger Band and the RSI is below 30, prepare to enter a buy position.

Set your stop loss at 5 pips or at the lower Bollinger Band.

Set your profit target at 3-4 pips or at the middle Bollinger Band.

Look for Sell Signals:

If the price closes outside the upper Bollinger Band and the RSI is above 70, prepare to enter a sell position.

Set your stop loss at 5 pips or at the upper Bollinger Band.

Set your profit target at 3-4 pips or at the middle Bollinger Band.

Trend Confirmation:

In a strong downtrend, wait for the price to penetrate the center line of the Bollinger Bands upwards before entering a buy position.

In a strong uptrend, wait for the price to penetrate the center line of the Bollinger Bands downwards before entering a sell position.