Bollinger Bands plus RSI: fading the band with momentum confirmation?
A common combo: RSI overbought while price tags the upper Bollinger Band, suggesting an overextension to fade. The catch — overbought can persist for days in trends.
Do you trade it?
- the exact conditions for the fade
- how you distinguish the trend from the range
- the band-riding trend that punished the fade
The Bollinger guide and RSI guide cover both halves.
Background: Bollinger Bands explained: the squeeze, band walks and mean reversion
Bollinger Bands wrap a moving average in two volatility bands. Learn how they're calculated, what a squeeze means and why touching a band isn't a signal on its own.
What are the standard Bollinger Bands settings?
A 20-period simple moving average, with bands 2 standard deviations above and below it.
Is touching the upper Bollinger Band a sell signal?
Not on its own. In a strong uptrend price can ride the upper band for a long time. A touch shows price is stretched relative to recent volatility, which needs other evidence before it becomes a trade.
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