Bollinger Band Breakout Rules with a Moving Average Filter

Summary

This document outlines a long-only breakout strategy attributed to an earlier system by Chuck LeBe and David Lucas. It uses a rising long-period moving average as a directional filter. A buy signal occurs when the closing price crosses upward through the upper Bollinger Band. The entry’s stop is placed below the lower band, with an additional point reserve. The exit signal is a downward cross of the middle Bollinger line.

The author recommends applying the rules to GBP/USD on an hourly chart. The document gives entry, stop, and exit conditions, but provides no backtest, performance data, parameter values, or evidence that the approach is profitable. It describes only long entries and does not discuss position sizing, transaction costs, or handling gaps and changing volatility, so the rules alone are not a complete trading plan.

Key ideas

• A rising long-period moving average serves as a filter for long entries.
• The buy trigger is a close crossing above the upper Bollinger Band.
• The stop is placed below the lower band with an added point reserve.
• The exit occurs when price crosses below the middle Bollinger line.
• The suggested market and timeframe are GBP/USD hourly charts.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.