Bollinger Bounce Forex Trading Strategy is used to define the overbought/oversold areas of the market and to spot the possible swing trading areas of the market. It is a Bollinger Bands-based trading technique mostly known for representing a simple trading plan that suits newbie traders as well.
Bollinger Bounce Forex Trading Strategy is a universal technique that allows you to apply it to trade all kinds of forex currency pairs within the financial markets. Furthermore, this Bollinger bounce strategy adjusts itself with all sorts of timeframe charts of the MT4 trading platform.
Bollinger Bounce Forex Trading Strategy Overview
Download and install strategy on your MT4 trading terminal. Once you’re done, find your chart like the following image:
Bollinger Bounce Forex Trading Strategy Explanation
This trading strategy represents a tri-band trading method for indicating the swing high/lows of the price movements along with the market trends. Its upper band indicates the overbought area of the market.
This is the area where we’ll be looking for a solid bullish pin bar to go for long entries. Upper bands of this strategy represent the oversold area of the market, usually considered as the place to go for short entries following at least one bearish pin bar originated from the lower band level.
Its mid-band works as a dynamic trendline used to identify the market trends based on the price position above/below the trend level.
Also Read: XM Review
Bollinger Bounce: Buy Conditions
- Price hits the lower band level
- A bullish pin bar forms right at the oversold area of the market
- Buy triggers when the above conditions are done
- Set stop loss below the lower band area
- Exit long/take profit whenever a bearish candle forms at the upper band level
Bollinger Bounce: Sell Conditions
- Price hits the upper band level
- A bearish pin bar forms right at the overbought area of the market
- Sell triggers when the above conditions are done
- Set stop loss above the upper band area
- Exit short/take profit whenever a bullish candle forms at the lower band level