Bollinger Bands MACD RSI Strategy

Do you know you can still build your own MT4 trading strategy without downloading an external indicator or system? MetaTrader 4 platforms have useful built-in indicators for determining market trends, momentums, and dynamic/fixed support/resistance zones. A perfect combination of such indicators can create a consistent trading strategy.

This guide explains how to anticipate forex and stock buy-sell signals using the Bollinger Bands MACD RSI Strategy in MT4.

What is the Bollinger Bands MACD RSI Strategy?

The Bollinger Bands MACD RSI Strategy reflects a trend-following trading system. It combines momentum and trend signals to identify potential trade setups.

Bollinger Bands MACD RSI Strategy Chart Example
Bollinger Bands MACD RSI Strategy Chart Example

Technically, the Bollinger Bands is a momentum indicator that outlines the overbought/oversold zones on the main price chart. Besides, you can also use its levels as dynamic S/R levels. The central line of the indicator helps determine market trends. For example, the price exceeding the mid-level indicates a bullish trend.

MACD generates straightforward trend signals using its histogram bars and a 9-day SMA (signal line). On the other hand, the RSI indicates overbought/oversold markets depending on whether its value hits 70 or 30.

All of these three indicators should develop similar trend and momentum signals before confirming an entry.

How to Trade Bollinger Bands MACD RSI Strategy?

The Bollinger Bands MACD RSI Strategy can work in all market conditions. Its Bollinger Band levels highlight OB/OS zones showing potential price retracement levels. So, you can use these levels to anticipate pullback trading signals in a trend-following market. At the same time, you can look for a counter-trend move from the overbought/oversold levels.

You can verify the OB/OS zones using the RSI signals. For example, the RSI is at 30 while the price rebounds from the lower Bollinger Band, indicating a solid oversold market.

After receiving a momentum confirmation, use the MACD signals to confirm the market trend. MACD value turns positive in uptrend markets and becomes negative during a downtrend.

Buy Signal

  • Price rejects lower Bollinger Bands and exceeds the central line.
  • MACD value is positive, with its bars closing above the signal line.
  • RSI line rebounds from 30 (oversold level).
  • Stop loss below the lower Bollinger Band.
  • Take profit after the RSI hits 70 and MACD bars close below the signal line.
Bollinger Bands MACD RSI Strategy Buy Signal
Bollinger Bands MACD RSI Strategy Buy Signal

Sell Signal

  • Price rejects higher Bollinger Bands and drops below the central line.
  • MACD value is negative, with its bars closing below the signal line.
  • RSI line rebounds from 70 (overbought level).
  • Stop loss above the higher Bollinger Band.
  • Take profit after the RSI hits 30 and MACD bars close above the signal line.
Bollinger Bands MACD RSI Strategy Sell Signal
Bollinger Bands MACD RSI Strategy Sell Signal

Bollinger Bands MACD RSI Strategy Pros & Cons

Pros

  • Bollinger Bands, MACD, and RSI are easy-to-use and beginner-friendly indicators.
  • Determines market trends, momentums, and potential S/R zones.
  • Outlines stop-loss levels and possible trade-exit zones.
  • Suits forex, stocks, and crypto-trading.
  • Applicable on MTF charts.

Cons

  • MACD may delay in generating trend signals during low volatile markets.

Conclusion

The Bollinger Bands MACD RSI Strategy ideally suits beginners in forex and stock trading because of its convenient trading rules and simple chart demonstrations of useful market insights. It can alone help you assess potential price levels, market trends, and momentums. However, you can still use additional S/R tools, such as Fibonacci levels and trendlines, to enhance your decision-making.