Bollinger Bands with Stochastic Histogram Reversal Strategy is another strategy that find conditions for reversal trading. This trading system is based on Bollinger Bands.
Time Frame 30 min or higher.
Currency pairs: any.
Forex Indicators:
Bollinger Bands period 20, deviations 2.0;
Stochastic histogram (14, 3,3);
MACD histogram (12, 26, 9).
Trading rules Bollinger Bands with Stochastic Histogram Reversal Strategy
Buy
Price go out the lower Bollinger Bands.
Stochastic histogram is above zero line.
MACD histogram crosses upward.
Place initial stop loss 2 pips below the lower bands.
Profit target is discretionary
Sell
Price go out the upper Bollinger Bands.
Stochastic histogram is below zero line.
MACD histogram crosses downward.
Place initial stop loss 2 pips above the upper bands.
Profit target is discretionary.
This trading system is effective but is very discretionary. The key to the system is to evaluate the width of the Bollinger Bands. With large bands is more probable predict price reversal.
In the charts below examples.
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