Tradingview Bollinger Band Indicator using Pinescript

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If you’re a trader looking for an automated and efficient way to enter and exit trades, then a custom Bollinger Band strategy could be your new best friend. Bollinger Bands are one of the most popular technical analysis tools used by traders worldwide. The bands consist of a middle line, which is typically a moving average, and two outer bands, which are set two standard deviations away from the middle line. This creates a dynamic channel that adjusts to market volatility.

In this article, we’ll take a deeper dive into a powerful trading strategy built on Bollinger Bands. This custom indicator incorporates three unique strategies—Breakout with Pivot Points, Red Candle Confirmation, and Reversal Entries—that automatically generate buy and sell signals for you. Let’s explore how this indicator works and how you can use it effectively in your trading.

What is this Custom Bollinger Band Indicator and How Does it Work?

The custom Bollinger Band indicator is designed to help traders detect breakout patterns, identify price action signals, and predict reversal entries using three distinct strategies. With this indicator, you don’t have to rely on manual chart analysis or complicated trading setups. Instead, the system does the hard work for you, providing automated signals that can save time and increase your efficiency.

1. Breakout with Pivot Points Strategy

The first strategy is centered on breakout trading, which is one of the most common methods used by traders. When the price breaks above or below the Bollinger Bands, it often signals the start of a new trend or a continuation of the existing trend. To add precision to the breakout signals, the indicator also considers pivot points—key levels of support and resistance. These pivot points are essential because they represent potential reversal areas or zones where the price could pause before continuing its movement.

For example, when the price breaks above the upper Bollinger Band and crosses a key resistance level (pivot point), the indicator will trigger a buy signal. Conversely, if the price breaks below the lower Bollinger Band and crosses a support level (pivot point), a sell signal is generated.

2. Red Candle Confirmation Strategy

The second strategy focuses on candlestick patterns, particularly the red (bearish) candles. Candlestick patterns can provide crucial insight into market sentiment and the potential direction of the price movement. This strategy is triggered when the price attempts to break outside the Bollinger Bands but forms a red candle inside the bands. In this scenario, the price may have failed to sustain its momentum, indicating a potential reversal or pullback.

To confirm this reversal, the next candle must fail to break the high of the red candle. When this happens, the indicator will signal a sell entry, confirming that the trend has likely reversed. If the price action occurs in the opposite direction, a buy signal is generated.

3. Reversal Entries Strategy

The third and final strategy focuses on catching reversal points in the market. This strategy works best on the daily timeframe, as it looks for price action outside the Bollinger Bands, which can indicate that the market is overextended.

Whenever a red candle closes outside the upper or lower Bollinger Band, it suggests that the price may be oversold or overbought, leading to a possible reversal. In this case, the indicator will trigger a buy or sell signal depending on the direction of the price. For instance, if a red candle closes outside the upper Bollinger Band, it signals that the price may reverse downwards, triggering a sell signal. On the other hand, if the price closes below the lower band, it might signal a potential buy setup.

How This Indicator Works on TradingView: A Step-by-Step Guide

TradingView is one of the best platforms for charting and analyzing financial markets. The custom Bollinger Band strategy described above is designed to seamlessly integrate with TradingView, providing an easy and user-friendly way to track potential trades. Here’s how this indicator works step-by-step:

1. Setting up the Indicator

To begin using the Bollinger Band strategy on TradingView, first, you need to add the indicator to your chart. If you’ve built a custom script, simply apply it by searching for the indicator name or adding the script manually. Once the indicator is on the chart, it will automatically display the Bollinger Bands along with the buy/sell signals generated by the three strategies.

2. Using the Breakout with Pivot Points Strategy

Look for price movements that break above or below the Bollinger Bands. The strategy will automatically detect when the price crosses a pivot point and trigger a buy or sell signal accordingly. These breakout signals can help you capture potential trend changes early, giving you an advantage in the market.

3. Confirming with Red Candle Patterns

When price breaks outside the Bollinger Bands, pay attention to the candlestick pattern that forms. If a red candle appears inside the band, followed by a candle that fails to break its high, this is a strong confirmation signal. The indicator will automatically generate a sell signal when this condition is met. Similarly, if a bullish reversal is observed, the indicator will provide a buy signal.

4. Reversal Entries Based on Daily Timeframe

For reversal entries, switch to the daily timeframe and look for candles that close outside the Bollinger Bands. A red candle closing above the upper band could signal a reversal downward, while a red candle closing below the lower band could indicate a potential upward reversal. The indicator will prompt buy or sell signals based on these conditions.

Benefits of Using This Custom Bollinger Band Strategy

1. Automation and Precision: The indicator takes the guesswork out of trading by automatically generating buy and sell signals based on predefined strategies.
2. Adaptability: Whether you’re trading stocks, forex, or cryptocurrencies, this indicator works across different asset classes and timeframes.
3. Enhanced Risk Management: By incorporating pivot points, candlestick confirmation, and reversal signals, this strategy offers a well-rounded approach to managing risk and capturing potential profits.
4. User-Friendly: Integrated with TradingView, the indicator provides an intuitive interface that makes it easy for both beginners and experienced traders to use.

Contact us at +91 7620658346 for access to this indicator. We offer algo development for TradingView indicators, MT4/MT5, and trading bots. 
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Conclusion

Incorporating a custom Bollinger Band strategy into your trading routine can significantly enhance your ability to identify key market opportunities. This powerful indicator combines three proven strategies—Breakout with Pivot Points, Red Candle Confirmation, and Reversal Entries—to automate your decision-making process, saving you time and reducing emotional biases. By leveraging these strategies in various asset classes, including stocks, forex, and cryptocurrencies, traders can boost their efficiency and improve overall trade execution. Whether you’re a beginner or a seasoned trader, this custom Bollinger Band indicator can be a valuable addition to your trading toolkit, helping you stay ahead of market trends and make well-informed decisions.

Disclaimer

The information provided in this article and any associated indicators is for educational purposes only. Trading financial markets involves substantial risk, and there is no guarantee of profit. The custom Bollinger Band strategy is based on historical data and technical analysis, which may not necessarily predict future market behavior. Users should perform their own research, consider their risk tolerance, and consult with a licensed financial advisor before making any trading decisions. The author and the developer of this indicator are not liable for any losses incurred as a result of using this strategy. Always trade responsibly.

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