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.
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