Bollinger Band Strategy in Forex
One of the biggest pitfalls encounted by novice forex traders is arbitrarily trying to pick a top or bottom in a currency pair with no indicator support. The "pure fade trade", on the other hand, is an intraday strategy that uses Bollinger band strategy and RSI to pick a top or bottom based on a clear recovery following an extreme move. The strategy looks for an intraday reversal by using a combination of three sets of Bollinger bands and the RSI on hourly charts.
The trade sets up when the RSI hits either an overbought or oversold level (above 70/under 30). This signals that you should begin to look for a possible reversal. But rather then immediately buying in the top of a trend based solely on RSI, you add in the Bollinger bands to identify a more exact point of exhaustion Threes sets are used because it helps to gauge the extremity of the move and the extent of possible recover.
