Bollinger + RSI, Double Strategy (by ChartArt)

The Bollinger + RSI, Double Strategy indicator combines Relative Strength Index (RSI) filters with Bollinger Band price action to identify high-probability mean reversion entries.

Usage

The Usage section describes how the script can be used to identify potential market reversals. This strategy requires confluence between momentum and volatility-based price levels to trigger signals.

• Long Entries: A long signal occurs when the RSI is below the oversold threshold (default 45) and the price, having been below the lower Bollinger Band, crosses back above it.
• Short Entries: A short signal occurs when the RSI is above the overbought threshold (default 55) and the price, having been above the upper Bollinger Band, crosses back below it.

The strategy remains in a trade until the opposite condition is met. Users can visualize these signals through optional bar coloring and background highlights to identify when both indicators align in an overbought or oversold state.

Details

The script is a refactored version of the original "RSI Strategy" and "Bollinger Bands Strategy" concepts by ChartArt. It utilizes a modified RSI period of 16 to provide a smoother momentum filter compared to the standard 14-period setting.

The core logic operates on the principle of confluence:

1. Momentum Filter: The RSI must confirm that the asset is in an extended state (above 55 or below 45).
2. Price Action Trigger: The price must interact with the Bollinger Band envelopes (2.0 standard deviations by default). A signal is only generated when the price "returns" from outside the bands while the RSI is still in the extreme zone.

This implementation is designed to avoid repainting on historical data as it relies on bar-close confirmations.

Settings

• RSI Period Length: Sets the number of bars used to calculate the RSI (Default: 16).
• RSI Value Range: Determines the overbought and oversold thresholds. A value of 45 sets the oversold level at 45 and the overbought level at 55 (100 - 45).
• Bollinger Bands SMA Period Length: The lookback period for the middle basis line (SMA) of the Bollinger Bands (Default: 20).
• Bollinger Bands Standard Deviation: The multiplier used to determine the width of the upper and lower bands (Default: 2.0).
• Enable Bar Color?: Toggles the coloring of price bars when a signal condition is met.
• Enable Background Color?: Toggles the background highlight when a signal condition is met.

FAQ

How does the RSI Value Range setting work? The RSI Value Range setting creates symmetrical thresholds. If you input 45, the script uses 45 as the bullish threshold and 55 (100 minus 45) as the bearish threshold.

Does this strategy include built-in risk management? The provided script focuses on entry logic and does not include trailing stop losses or automated take-profit targets. It enters a position when conditions are met and cancels pending orders if the confluence is lost.

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.