Bollinger Bands %b & RSI Indicator & Alert

The Bollinger Bands %b & RSI Indicator & Alert tool provides a synchronized view of momentum and volatility by normalizing Bollinger Bands %b to the RSI scale, helping traders identify high-probability overbought and oversold conditions.

Usage

The indicator can be used to identify exhaustion points where both price volatility and momentum reach extremes. A signal is generated when both the RSI and the normalized Bollinger Bands %b enter overbought (above 70) or oversold (below 30) territory, provided specific candle confirmation logic is met.

When these conditions align, the indicator highlights the area with a blue background and plots 'BUY' or 'SELL' arrows. Traders typically use these signals for mean reversion or trend exhaustion plays, particularly in markets like Cryptocurrencies and Forex on shorter timeframes.

Details

The script functions by calculating a standard RSI and a Bollinger Bands %b value. The %b value, which typically fluctuates between 0 and 1, is mathematically normalized to fit the 30–70 range used by the RSI.

The signal logic requires:

1. RSI to be above 70 or below 30.
2. Price to be outside the Bollinger Bands.
3. Specific candle sequence checks to ensure momentum is peaking before a signal is confirmed.

Settings

• BB Period: Sets the lookback period used for the Bollinger Bands calculation.
• Source: Determines which price data (close, open, hl2, etc.) is used for the calculations.
• Multiplier: Adjusts the standard deviation for the Bollinger Bands, expanding or contracting the bands.
• RSI Period: Sets the lookback period for the Relative Strength Index.

FAQ

How do I use the signals from the indicator?

Look for the colored background and arrow labels. A 'BUY' signal indicates both indicators suggest an oversold condition with price confirmation, while a 'SELL' signal indicates an overbought condition.

Can I set alerts for these signals?

Yes, the script includes built-in alert conditions for crossovers and specific buy/sell signals that can be configured through the TradingView alert menu.

How do I access this indicator?

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