BB and RSI Indicator Alert v0.3

The BB and RSI Indicator Alert v0.3 tool provides specialized trade identification for mean-reversion strategies, particularly optimized for short-term timeframes such as the 1-minute and 15-minute charts. By combining Bollinger Bands, the Relative Strength Index (RSI), and customizable moving average filters, it identifies potential reversal points when price action deviates significantly from established boundaries while maintaining specific momentum conditions.

Usage

The script identifies two levels of interest: pre-warning signals and trade execution signals.

• Pre-Warning (Purple Diamond): Appears when the price breaks outside the Bollinger Bands while the RSI remains within its defined boundaries (default 25/75). This indicates a potential setup is forming.
• Trade Alerts (Red/Green Pointers): Labeled "PUT" or "CALL," these signals appear when the previous candle closed outside the Bollinger Band and the current conditions suggest a reversal.
• Market Direction Filter: When enabled, the script uses a Fast and Slow Moving Average (e.g., 50 EMA and 200 EMA) to filter trades. It only allows "CALL" signals when the market trend is upward and "PUT" signals when the trend is downward.
• Timeframe Application: While originally designed for 60-second or 120-second binary options strategies on a 1-minute chart, it can be applied to standard scalp trading up to the 15-minute timeframe.

Details

The indicator relies on the confluence of volatility and momentum. A Bollinger Band break suggests an overextended price, but the RSI filter ensures that the momentum isn't so extreme that a "runaway" trend occurs immediately. The inclusion of a directional filter allows traders to align their counter-trend entries with the broader market context defined by long-term moving averages.

Settings

Bollinger Bands

• Bollinger Length: The lookback period for the Bollinger Band basis line (default is 14).
• Bollinger Standard Deviation: The multiplier for the width of the bands (default is 2.0).

RSI

• RSI Length: The lookback period for the RSI calculation.
• RSI Upper Level: The threshold below which the RSI must stay for a valid "PUT" signal.
• RSI Lower Level: The threshold above which the RSI must stay for a valid "CALL" signal.

Directional Filter

• Use Directional Filter: Toggles the moving average trend requirement.
• Fast/Slow MA Type: Choose from multiple types including SMA, EMA, WMA, VWMA, HullMA, and more.
• Fast/Slow Length: Sets the periods for the trend-detecting moving averages.
• Candles to test Market Direction: The number of consecutive bars the slow MA must be rising or falling to confirm a trend.

Geometry

• Candle body, how far past BB boundary: A sensitivity setting (in points/ticks) requiring the price to exceed the Bollinger Band by a specific distance before triggering.

FAQ

How do I interpret the "PUT" and "CALL" labels?

A "PUT" label suggests a potential bearish reversal (short), while a "CALL" label suggests a potential bullish reversal (long). These are based on mean-reversion logic after a Bollinger Band breach.

Why do some signals disappear before the candle closes?

Like many volatility indicators, the conditions are calculated in real-time. Signals may fluctuate while the current candle is active; it is generally recommended to wait for the candle to close to confirm the alert.

How can I access BB and RSI Indicator Alert v0.3?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.