Bollinger Bands / Rsi – Strategy
Bollinger Bands are one of the most used tools among traders for assessing the market trend and its volatility.
From a working standpoint, Bollinger Bands give an approximation of optimal buying and selling points when the following conditions are present:
when the price graph goes out of the upper band and then comes back in, it is considered a signal to sell (DOWN – PUT); this corresponds to a rapid rise in the price, followed by a slowing down or adjustment
when the price graph goes out of the lower band and then comes back in, it is considered a signal to buy (UP – CALL); that is, the price dropped very quickly, coming to a stop with the likelihood of reversing the trend.
The use of Bollinger Bands, together with the RSI indicator, serves to identify the moments in which the trend could reverse.
These points of inversion are our trading signals to enter the market with this simple binary options strategy.
To use this strategy, we need this graphical configuration:
Bollinger Bands set at 20 periods
Chart to analyse at 15 min timeframe
Broker’s Chart to trade from at 30 – 60 min timeframe
When To Purchase A Down Trade
The conditions for buying a down trade in binary options that expires at the hour, are as follows:
Prices above the upper Bollinger band
RSI value above 60 – 70 points
Purchasing PUT binary options: you purchase a binary option for a PUT when the moving average of the oscillator RSI is in a phase of overbought.
If these conditions are present, then we can purchase a DOWN or PUT option.
When To Purchase An Up Trade
The conditions for buying an up trade in binary options that expires at the hour, are as follows:
Prices below the lower Bollinger band
RSI value below 30 – 20 points
Purchasing CALL binary options: you purchase a binary option for a CALL when the moving average of the RSI oscillator is in a phase of oversold
If these conditions are present, then we can buy an UP or CALL option.
The RSI provides us with important information about the overbought and oversold zones reached by the price in these areas.
The price tends to reverse its direction, moving towards the opposite side:
If it is in overbought, it moves towards oversold.
If it is in oversold, it moves towards overbought.