Bollinger Band Overbought and Oversold is a scalping system, built with a combination of top familiar trend-following indicators like Bollinger Bands, Moving Average, and Stochastics. It examines the overbought/oversold condition of the market and plots trade signals within the direction of the momentum.
Bollinger Band Overbought and Oversold is applicable to trade any forex currency pair you want. Besides, as a scalping system, it suits well with shorter timeframes like M5 & M15.
Bollinger Band Overbought and Oversold Overview
Download Bollinger Band Overbought and Oversold and install it at the MT4 platform. Once you’re done, your chart will appear like the image below:
Bollinger Bands Overbought and Oversold Explanation
- Bollinger Bands: One of the most popular overbought/oversold indicators among the traders. Its upper band represents the overbought condition and lower band as the oversold condition of the market. These bands also work as dynamic support/resistances.
- 100 MA: It is a 100-day period smoothed Moving Average. Price above its level means the trend is bullish and if below the level then represents the bearish trend of the market. You can also use its levels for trailing stops.
- Stochastics: It is quite familiar as an overbought/oversold indicator like Bollinger Bands. Its value reaches above 80 means the overbought condition of the market. On the other hand, the value drops below 30 represents the oversold condition of the market.
Bollinger Band: Buy Conditions
- A bullish candle appears near the lower Bollinger Band
- Stochastics value drops below 20
- Price breaks above the 100 MA level
- Set stop loss below the lower Bollinger band
- Exit long/take profit whenever stochastics value rises above 80 and price hits the upper Bollinger Band at the same time
Bollinger Band: Sell Conditions
- A bearish candle appears near the upper Bollinger Band
- Stochastics value rises above 80
- Price breaks below the 100 MA level
- Set stop loss above the upper Bollinger band
- Exit short/take profit whenever stochastics value drops below 20 and price the lower Bollinger Band at the same time