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2016issue C0617-20

A permission stack for Bollinger, RSI, and the 50-period average

The archive specifies four band-RSI pairings as joint entry conditions, then lets a 50-period exponential average grant or refuse each pairing. This article restates that three-layer workflow: bands locate the extreme, the oscillator classifies it, and the average decides eligibility.

  • Four band-RSI pairings treat outer-band contact plus an RSI reading relative to 30 or 70 as the joint entry conditions.
  • Trend-permission discards any pairing that conflicts with a clearly sloped 50-period exponential average, and a nearly flat average is a no-trade regime.
  • When the average slopes down, only short pairings are taken, including upper-band contact with RSI below 70 but not below 50.
  • The combination is framed as a search for weakness on the side opposing the trend, not as the conventional same-direction extreme rule alone.
Entries in this reading3 entries
Current trackBollinger Bands84 readingsRelative Strength Index186 readingsMoving average449 readings

Three jobs in one combination

The archive assigns each tool a distinct job. A 20-period volatility envelope supplies the price-location filter: outer-band contact marks where a pairing may begin. A 14-period bounded oscillator is then read against the 30 and 70 thresholds to classify a confirmed extreme versus an extreme that is already leaving. A 50-period exponential average is the trend-permission switch for every band-and-oscillator pairing.

Documented settings

The documented settings are a 20-period Bollinger Band, a 14-period RSI with 30 and 70 levels, and a 50-period exponential average, applied on four-hour bars.

Four band-RSI pairings

Four explicit pairings of outer-band contact with an RSI reading relative to 30 or 70 are specified as the joint entry conditions. A band-rsi-pairing is that joint condition: outer-band contact plus an RSI reading on a stated side of 30 or 70.

A lower-band touch with RSI still above 30 is treated as a long pairing once the oscillator starts leaving the oversold region. An upper-band touch with RSI still below 70 is treated as a short pairing once the oscillator starts leaving the overbought region.

The other two pairings require RSI below 30 at a lower-band touch or RSI above 70 at an upper-band touch so both tools confirm the same extreme.

Trend permission and slope

Trend-permission is the rule that a pairing is ignored unless it agrees with a clearly sloped 50-period exponential average. Any pairing is discarded when it conflicts with that slope, and the average must itself display a clear trend. A nearly flat 50-period exponential average is treated as a no-trade regime even if band and RSI conditions appear.

When the 50-period exponential average slopes down, only short pairings are taken, including upper-band contact with RSI below 70 but not below 50. When the 50-period exponential average slopes up, a lower-band touch with RSI briefly below 30 is treated as a long pairing.

Weakness against the trend

The combination is framed as a search for weakness on the side opposing the trend, not as the conventional same-direction band-and-RSI extreme rule alone. Editorial note: that opposing-side search is why the fading pairings, such as an upper-band touch with RSI still below 70, sit inside the same stack as the confirmed-extreme pairings rather than replacing them.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
39 of 45 in the Bollinger Bands track
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All readings on this track · 45 readings
  1. 1992Constructing volatility-scaled bands with relative strength index confirmation
  2. 1994Implied volatility as a band-defined regime filter for index options
  3. 1995Constructing projection bands from least-squares slopes
  4. 1995Constructing regression projection bands and range oscillators
  5. 1996Constructing Bollinger bands, percent-b, and stochastics
  6. 1996Constructing mechanical rules from Bollinger Bands and stochastics
  7. 1996Constructing a standard-error envelope around a linear regression
  8. 1996Dual-horizon ratio envelopes and regression error channels
  9. 1997Rational group structure with a trend screen, RSI, and bands
  10. 1997Asymmetric volatility band construction
  11. 1998Constructing three-state filters from Bollinger band envelopes
  12. 1999Combination filters with Bollinger Bands and the relative strength index
  13. 1999Constructing stochastic timed exits and band-RSI reversals
  14. 1999Evaluating Bollinger Bands against fixed-width and range-based envelopes
  15. 2000Constructing a Bollinger Band target as a forward price
  16. 2001Numeric candlestick encoding with local size bands
  17. 2001Ranked candlestick sentiment to band-cross entries
  18. 2002Combining Bollinger Bands, RSI, and a stop-loss
  19. 2002Bollinger Bands remain filters, not forecasts
  20. 2002Constructing a stochastic RSI with Bollinger bands
  21. 2002Constructing a StochRSI and Bollinger mechanical system
  22. 2003Constructing volatility-scaled Bollinger envelopes
  23. 2003Why tick breadth fails as a market personality
  24. 2005Constructing Bollinger bands versus fixed trading bands
  25. 2006Squared versus absolute deviation in envelope construction
  26. 2006Confirming yen crossovers with implied volatility and bands
  27. 2006A daily candle reversal is a hypothesis until shorter sessions fail at the same zone
  28. 2008Rebuild the Relative Strength Index as price-scale bands
  29. 2008Reading Relative Strength Index extremes on one price axis with Bollinger Bands and moving averages
  30. 2011Three-filter confirmation for short-swing futures
  31. 2011Constructing an inverse Fisher stochastic with bands and averages
  32. 2012Constructing a Bollinger Band indicator suite
  33. 2012Stacking price extremes, crossovers, bands, and MACD
  34. 2012Adaptive Bollinger band impulse, trend, and momentum filters
  35. 2013Rescaling stochastic, percent-B, and wave-count parameters
  36. 2014Industry-group quartile pivots as a Bollinger Bands case study
  37. 2014Bollinger Bands as adaptive price envelopes: a 2014 classroom case
  38. 2016Trend-channel entry rules from stacked moving averages
  39. 2016A permission stack for Bollinger, RSI, and the 50-period average
  40. 2017Constructing weighted Bollinger bands and volume averages
  41. 2017Four swing-entry rules that share a timed exit
  42. 2017Two-wave monthly cycles as a regime filter
  43. 2019Constructing exponential-deviation-bands from a midline-average
  44. 2020Critiquing exponential variants of Bollinger Bands
  45. 2020Constructing selectable volatility and moving-average bands
By fieldIndicators and filters682 readingsBy year201678 readings
All 84 readings tagged Bollinger Bands
Also on Bollinger Bands5 readings
1992Constructing volatility-scaled bands with relative strength index confirmation2003Constructing volatility-scaled Bollinger envelopes2008Reading Relative Strength Index extremes on one price axis with Bollinger Bands and moving averages1997Rational group structure with a trend screen, RSI, and bands1999Combination filters with Bollinger Bands and the relative strength index