BOLLINGER BANDS AND MACD REVERSAL STRATEGY

BOLLINGER BANDS AND MACD REVERSAL STRATEGY

The Bollinger Bands and MACD reversal strategy is a classic yet highly effective basic trading approach. Its logic is straightforward: traders wait for specific conditions to align before making their moves.

Setup and Strategy Details

• Timeframe: Suitable for 5 minutes or longer timeframes.
  
  
• Currency Pairs: Works well with any pairs, but particularly effective with EUR/GBP, AUD/NZD, and AUD/CHF.
  
  
• Trading Style: Applicable for both day trading and swing trading
  

Indicators

1. Bollinger Bands (25, 2.5)
   
   Simple Moving Average (SMA) Periods: 9 (applied to the closing prices).
   
   MACD (Moving Average Convergence Divergence):
   
   • Parameters: 7, 21, 9
     
     Trading Rules
     

Buy Signal:

1. When the price touches or exceeds the lower Bollinger Band:
   
   • Wait for the price to be greater than the 9-period SMA.
     
     Confirm the buy signal when the MACD crosses upwards.
     

Sell Signal:

1. When the price touches or exceeds the lower Bollinger Band:
   
   • Wait for the price to be greater than the 9-period SMA.
     
     Confirm the sell signal when the MACD crosses upwards.
     

Risk Management:

• Stop Loss: Set at the previous swing’s high or low.
  
  Take Profit: Either at the middle Bollinger Band or with a risk-reward ratio of 1:1.15.
  

Remember to adapt this strategy to your risk tolerance and trading preferences. Happy trading!