Indicator Overview
This screener combines the Relative Strength Index (RSI) and Bollinger Bands across multiple timeframes to identify high-probability long signals. By leveraging momentum (RSI) and volatility (Bollinger Bands), traders can refine entry points with greater confidence.
Understanding RSI
What Is RSI?
The Relative Strength Index (RSI) is a momentum oscillator measuring price movement velocity. It ranges from 0 to 100, with key thresholds at 30 (oversold) and 70 (overbought).
Key Features:
- Divergence Detection: Signals potential reversals when price and RSI trend oppositely.
- Trend Confirmation: Values above 50 indicate uptrends; below 50 suggest downtrends.
- Default Calculation: 14-period average gains/losses.
Understanding Bollinger Bands
What Are Bollinger Bands?
Developed by John Bollinger, these bands consist of:
- Upper Band: 20-period SMA + (2 standard deviations).
- Middle Band: 20-period SMA.
- Lower Band: 20-period SMA - (2 standard deviations).
Key Features:
- Volatility Gauge: Wide bands = high volatility; narrow bands = low volatility.
- Mean Reversion: Prices often revert to the middle band.
- Squeeze Indicator: Narrow bands precede breakouts.
Combining RSI and Bollinger Bands
Strategy Rules
RSI Conditions:
- 15-minute RSI crosses above 60.
- Hourly/Daily RSI sustains above 60.
Price Position:
- Above 20-period SMA OR
- "Walking" the upper Bollinger Band.
Entry/Exit Signals
- Long Entry: All conditions met.
- Exit: Price closes below 20 SMA or stop-loss triggers.
Example Trade Setup
Chart Configuration:
- Apply the screener to TradingView.
- Set RSI (14-period) and Bollinger Bands (20 SMA, 2 STD).
Signal Monitoring:
- Confirm RSI alignment (15-min, 1-hour, daily).
- Verify price/Bollinger Band relation.
Execution:
- Enter long with stop-loss at recent 15-min low.
- Trail stop or exit on RSI drop below 60.
Risk Management
- Stop-Loss: Mandatory (e.g., 1-2% account risk).
- Backtesting: Validate strategy performance historically.
- Avoid Overtrading: Wait for confluence of signals.
FAQs
1. Can this strategy work for short trades?
Yes—flip conditions (RSI < 40, price below lower Bollinger Band).
2. Best timeframes for day trading?
15-min + 1-hour charts balance noise and trend clarity.
3. How to avoid false signals?
Require volume spikes or candlestick confirmation (e.g., engulfing patterns).
4. Optimal assets for this strategy?
Liquid forex pairs or large-cap stocks with clear trends.
5. Alternative indicators to complement?
MACD for trend confirmation or volume-weighted MA.
Final Thoughts
This RSI-Bollinger Bands screener enhances trade timing by filtering signals across timeframes. 👉 Explore advanced trading tools to further refine your strategy. Remember: consistency and discipline outweigh complex setups.