SHEL Bollinger Band

No. A band touch alone is not enough. Wait for a bullish reversal candle (hammer, engulfing) to confirm the touch. Also check RSI is oversold and oil is not strongly bearish. Confirmation increases win rate significantly.

Approximately 95% of price action stays within 2 standard deviation bands. This means price exceeding the bands is statistically unusual and often leads to reversion. However, 5% of the time price stays outside - These are the failures.

No. A squeeze (narrow bands) predicts that a breakout is coming but not which direction. Wait for price to break above or below the bands after squeeze to determine direction. Then trade in the breakout direction.

Walking the bands occurs in strong trends. In a powerful uptrend, price can stay at or above the upper band for extended periods. This shows trend strength. Don't fade walking bands - The trend is too strong for mean reversion.

Both are volatility bands, but Bollinger uses standard deviation while Keltner uses ATR. Bollinger Bands are more responsive to price spikes. Some traders use both together - When Bollinger goes inside Keltner, it's a stronger squeeze signal.

High-quality: Clear reversal candle, RSI at extreme (<30 or >70), oil aligned, bands at normal width, no recent failed touches. Low-quality: Weak candle, RSI neutral, oil conflicting, squeeze or very wide bands, multiple recent failures.

Check band width first. Normal/Wide bands = Mean reversion (fade band touches). Narrow bands (squeeze) = Breakout (trade direction of band break). The approach depends on current volatility regime.

Double bottom (W-pattern) at lower band shows sellers tested support twice and failed. This confirms the level. Win rate improves ~10-15% compared to single touches. Wait for second touch to form before entering.

1.5 SD gives more signals but more noise/failures. 2.5 SD gives fewer but higher quality signals. Default 2.0 is balanced. Consider 2.5 if you want fewer but cleaner trades. Backtest both for your style.

If price makes new low but %B makes higher low, it's bullish divergence - Price is lower but less extreme relative to bands. This suggests selling pressure is weakening. Look for reversal confirmation to enter long.

Backtesting shows 18-22 period all produce similar results for Shell. Standard 20 is robust. Shorter (14-18) gives more signals; Longer (21-25) gives smoother bands. Don't over-optimize - 20 is widely watched and works well.

Use EMA (20/50) for trend direction, Bollinger for entry timing. In EMA uptrend, buy Shell at lower Bollinger band (pullback in trend). In EMA downtrend, sell at upper band. This combines trend + mean reversion.

Bollinger trades typically last 3-10 days for mean reversion. CFD financing of ~5% annually = ~0.014% per day. For a 7-day trade, ~0.1% cost. Factor this into R/R calculation for longer holds.

Target Sharpe ratio > 0.5, ideally > 0.7. Mean reversion on single stock typically achieves 0.5-0.9. Shell specifically can be enhanced with oil filter. Lower than diversified portfolios but acceptable for systematic approach.

Shell changed from RDSA/RDSB to SHEL in January 2022. Ensure data provider properly chains these. Verify no false signals around transition. Also note Shell cut dividend in 2020 - This affected price significantly.