Bollinger Band Bounce

In strong downtrends, price can 'walk the band' - touching it repeatedly while continuing down. The bands expand, but price keeps falling. That's why confirmation (reversal candles, RSI, volume) is essential before buying.

Start with the standard settings: 20-period SMA with 2 standard deviations. These are Bollinger's original settings and work well for most swing trading. Adjust only after you understand how the indicator behaves.

Yes, but use shorter timeframes (1-hour or 4-hour charts). The principles are the same, but expect more noise and faster moves. Many day traders use 20-period bands on these intraday timeframes.

Price closing below the lower band is actually a stronger oversold signal than just touching it. However, wait for a confirmation candle (price closes back inside the bands) before buying - don't just buy the moment price goes below.

They're the same thing! The middle band IS a 20-period simple moving average. The Bollinger Bands just add upper and lower bands based on standard deviation around this average.

Look for: 1) Confirmation candle (bullish pattern at band), 2) RSI starting to turn up, 3) Volume on bounce, 4) Weekly band not broken. If all confirm, higher probability bounce. If price keeps walking the band, it's trend continuation.

Use Double Bollinger - both! The 2 SD bands define extremes, while 1 SD bands create trading zones. The area between lower 1 SD and 2 SD is your buy zone; between upper 1 SD and 2 SD is your sell zone.

When bands are very narrow (squeeze), volatility is low and a breakout is coming. If price bounces from lower band during squeeze, it's a good setup with tight risk. However, be prepared for a breakout rather than just a bounce.

Ideally RSI below 30 when price touches lower band. This double oversold confirmation increases probability. RSI between 30-40 is acceptable but less strong. Above 40, the bounce may lack momentum.

Look for confluence: lower band + horizontal support + RSI oversold = high probability. The more factors aligning at the same price level, the stronger the potential bounce.

Scan for: price within 0.5% of lower band, bullish candle today, RSI below 35, volume above average. Rank by %B (lower = more oversold) and weekly band position. Focus on 3-5 best setups.

Low volatility: use standard 2 SD. High volatility: consider 2.5 SD to filter noise. Trending markets: use longer period (30-50) to identify significant pullbacks rather than minor touches.

When bands are wide (high volatility), reduce position to 60% of normal. When bands are narrow (squeeze), can use full position. Calculate: Position = Account Risk / Stop Distance, then multiply by volatility factor.

First touch at lower band, rally to middle, second touch (doesn't have to reach band exactly), then buy on break above the middle rally high. Stop below the second low. Target upper band or beyond.

Well-designed systems typically achieve 50-60% win rates. The key is proper confirmation and avoiding walking bands. Profitability comes from good risk/reward (middle band target vs. band stop) and filtering with RSI/volume.