Price Action + Bollinger Strategy

The Price Action + Bollinger Strategy indicator identifies potential mean reversion opportunities by combining Bollinger Band deviations with specific price action candlestick patterns. It aims to capture market reversals when price extends beyond statistical norms and shows immediate signs of exhaustion.

Usage

The strategy is primarily designed for intraday trading, specifically optimized for the 30-minute timeframe. It utilizes the following logic for trade entries:

• Long Entry: Triggered when the previous candle closes below the lower Bollinger Band and satisfies specific price action criteria (a significant bearish move followed by a smaller bullish reversal candle).
• Short Entry: Triggered when the previous candle closes above the upper Bollinger Band and satisfies specific price action criteria (a significant bullish move followed by a smaller bearish reversal candle).

Users can utilize the built-in alerts to be notified when these conditions are met, allowing for timely execution in volatile markets.

Details

The indicator constructs a Bollinger Band framework using a Simple Moving Average (SMA) and a standard deviation multiplier of 2.1. The "Price Action" component evaluates candle body size relative to a 100-period average body size. It specifically looks for:

1. A "climax" candle that closes outside the bands with a body significantly larger than the average.
2. A subsequent "reversal" candle that is smaller in size and closes in the opposite direction.

This combination filters out simple band touches and focuses on instances where the price exhibits a clear exhausted state followed by a shift in momentum.

Settings

• SMA candle: Sets the period length for the Simple Moving Average used to calculate the Bollinger Bands. Default is 21.

FAQ

How do I use the Price Action + Bollinger Strategy?

Apply the indicator to your chart and look for the strategy entry signals. It is best used on a 30-minute timeframe for intraday setups.

Can I adjust the sensitivity of the bands?

The SMA length can be adjusted in the settings; however, the deviation multiplier is hardcoded to 2.1 to maintain the specific statistical profile of the strategy.

Where can I access this tool?

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