Zinc Bollinger Band Strategy

Bollinger Bands are volatility envelopes around a 20-period moving average. The upper band is +2 standard deviations above the average, lower band is -2 below. About 95% of price action stays within bands. When price touches bands, it's 'stretched' from average.

Enter after price touches the band AND forms a reversal candle (hammer, engulfing, doji). Don't enter just because price touched - in trends, price can 'walk' the band for weeks. The reversal candle confirms actual turning.

A squeeze occurs when bands narrow to historical lows, indicating very low volatility. Squeezes often precede significant price moves (breakouts). During squeeze, avoid mean reversion and prepare for breakout in either direction.

The primary target is the middle band (20 SMA) - the 'mean' to which price reverts. For extended moves, you can target the opposite band, but middle band is the conservative and most common target.

Use 1.5× ATR beyond entry or beyond the band extreme (recent high/low). Stops at the band itself are too tight as price often slightly exceeds bands. Position size accordingly to risk 1.5% maximum.

Band walk shows as multiple consecutive touches of the same band without mean reversion. Middle band acts as support (uptrend) or resistance (downtrend). ADX is usually > 25. Avoid mean reversion during band walks - it's a trending market.

Double patterns at bands (W at lower, M at upper) are high probability because two tests establish support/resistance, and RSI divergence often appears (showing momentum weakening). Wait for pattern completion before entering.

Use daily bands for context and 4H for signals. 4H lower band signal is strongest when daily is also in lower half of bands (aligned oversold). Conflicting timeframes (4H oversold, daily overbought) warrant caution.

Inventory adds fundamental context. Lower band + falling inventory = strong long (technical + fundamental bullish). Lower band + rising inventory = weak long (technical bullish, fundamental bearish). Adjust position size based on confirmation level.

Wait for bands to squeeze (bandwidth at historical low). When price closes outside band with expanding bandwidth, enter in breakout direction. Use prior trend, fundamentals, and structure for direction clues. Target is measured move based on squeeze width.

Calculate: Middle = SMA(20), StdDev = StdDev(20), Upper = Middle + 2×StdDev, Lower = Middle - 2×StdDev. Signals: Long when Close <= Lower AND Bullish Candle AND ADX < 25. Exit at Middle Band or 1.5× ATR stop. Test across volatility regimes.

For mean reversion: buy calls at lower band, puts at upper band (defined risk). For squeeze: straddle (buy call + put) profits from breakout regardless of direction. Spreads reduce cost. Use 14-30 DTE for mean reversion.

Low volatility: standard (20, 2) or tighter (20, 1.5). Normal: standard (20, 2). High volatility: wider (20, 2.5) to filter noise, reduce position size. Identify regime by bandwidth percentile vs historical.

Compare %B across related markets (zinc vs copper). Lower %B = more oversold. If zinc more oversold than copper, may outperform on bounce. Divergences signal relative value opportunities. Can trade spread or adjust single-market position.

Zinc Bollinger: 10-15% of metals allocation. Max 2 concurrent positions. Track by signal type (mean reversion, squeeze breakout) and regime (volatility level). Manage correlation with copper band strategy.