Last Updated on May 8, 2025 by Tim Morris

Overbought and Oversold Forex Bollinger Band Strategy

Bollinger Band is used to measure oversold and overbought. This is a trading term. Upper band shows over bought and lower band is oversold. This is applicable to any currency pairs and works on a 15 minute or higher timeframe.

Forex  Indicators:

• Bollinger Bands (20 periods,2 Standar deviation);
• 34 Moving average smoothed ;
• Stochastic indicator (5,3,3).

Rules for Long:

• Buy when the price is oversold.
• Stochastic indicator also in oversold and must cross upward but also above the 34 period moving average smoothed.

Rules for Short:

• Short when the price is overbought.
• Stochastic indicator also in overbought and must cross downward but also below the 34 period moving average smoothed.

Exit when the position trades back middle band, at the predetermined profit target.
You can also exit when the price close a bar below/above the moving average.

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