The following strategy can be used on any of the intraday charts however it has shown the best results on the 1-hour timeframe and therefore it’s best to use it on the 1-hour chart. It is most suitable on the major Forex pairs, although there are no limitations regarding the Fx pairs it can be applied on.
This Bollinger Bands - CCI strategy is not a day-trading strategy, meaning trades can be held for as long as the conditions for the trade remain true regardless if that means holding the position overnight.
The main goal of the strategy is to profit on the acceleration of trends and their continuation in the direction of the trend in force.
Below is an example of how the strategy looks on the charts:
Indicators to be used:
For this strategy, we’ll apply 2 main indicators which are necessary.
Additionally, you can also place the Master MACD and the ADX indicators below the chart to help you determine the momentum of the trend. Weak momentum may be an indication that a potential trading opportunity is not good and the trade will not work out well.
While placing the Master MACD and the ADX are not a requirement for this strategy, they are often helpful as both of those are very useful indicators. Avoiding trades where the ADX is below 25 will result in better trading signals and trades with a higher probability for success.
But, the reason for using these two indicators is only to aid the trader in reading the primary indicators and signals of this strategy which are the crossing of the middle line of the Bollinger Band and the CCI. So, just because the ADX not exactly at 25 doesn’t necessarily mean you should avoid taking the trade altogether if, for example, the other conditions look good.
For illustrating the strategy in this article, we have placed both the ADX and the Master MACD indicators.
The trading conditions for the strategy:
Long trade entry:
An example of a long trade is shown on the chart below which resulted in a nice profit.
Short entry rule:
A short trade generated with this strategy is shown on the chart below.
General guidelines for the strategy
Related education and FX know-how:
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