SHEL Bollinger Band Strategy

Bollinger Bands are volatility envelopes around a moving average. The middle band is a 20-period SMA. Upper and lower bands are 2 standard deviations away. Bands expand with volatility and contract when calm.

When price touches lower band, look for long entry (especially with RSI < 30). When price touches upper band, look for short entry (especially with RSI > 70). Target the middle band (20 SMA).

A squeeze occurs when bands narrow significantly (low bandwidth). This indicates low volatility and often precedes a strong breakout. Trade by waiting for price to close beyond a band, then follow the breakout direction.

For mean reversion long: stop below lower band with buffer (0.5× ATR). For mean reversion short: stop above upper band with buffer. Allow room for band penetration but limit loss.

Primary target is the middle band (20 SMA) for mean reversion. Aggressive target is the opposite band. Consider taking 50% at middle band, trailing rest. Breakouts target 2-3× bandwidth.

%B = (Price - Lower) / (Upper - Lower) × 100. It normalizes price position: 0 = lower band, 50 = middle, 100 = upper. %B < 5 is strongly oversold (long signal), > 95 is strongly overbought (short signal).

Calculate bandwidth = (Upper - Lower) / Middle × 100. Compare to 125-day (6-month) bandwidth. If current is below 20th percentile, it's a squeeze. Look for breakout on close beyond band with volume.

Shell at lower band + oil stable/rising = valid long. Shell at lower band + oil crashing = skip (may break band). Shell at upper band + oil surging = skip (may walk band). Oil context determines if mean reversion is appropriate.

Using both 1σ and 2σ bands creates zones. Buy Zone: between -1σ and -2σ. Sell Zone: between +1σ and +2σ. More precise than single band touch. Enter when price enters extreme zone.

1) Identify squeeze (bandwidth at 6-month lows). 2) Wait for close beyond band with volume. 3) Enter next bar in breakout direction. 4) Stop at middle band or inside bands. 5) Trail with middle band or target 2-3× bandwidth.

Calculate Middle = SMA(20), StdDev(20), Upper = Middle + 2σ, Lower = Middle - 2σ. %B = (Close-Lower)/(Upper-Lower). Mean reversion: %B < 5 + RSI < 30 + bullish candle. Squeeze: bandwidth percentile < 20. Breakout: squeeze + close beyond band + volume.

Buy calls at lower band, puts at upper band for defined risk mean reversion. During squeezes when IV is low, buy straddles to profit from volatility expansion. Use %B levels for strike selection.

Weekly bands set major context (support/resistance). Daily provides signals. 4H refines entries. Weekly at lower + Daily at lower = strong confluence. Trade daily signals aligned with weekly context.

Low vol (squeeze): Focus on breakouts, not mean reversion. Normal vol: Mean reversion primary, standard parameters. High vol: Mean reversion with wider stops, consider 2.5σ bands. Identify regime with bandwidth percentile.

Per-trade: 2% risk. Total Shell: max 5%. Total energy: max 10%. Max concurrent band positions: 3. Track by signal type (mean reversion vs breakout) and volatility regime. Compare to benchmark.