Bollinger Band Harami Reversal Strategy With Fixed Exits

Summary

This strategy looks for bullish and bearish Harami-style candle patterns after the prior candle reaches an outer Bollinger Band. The bands use a 20-period simple moving average and a width of two standard deviations. A bullish setup requires the prior candle to touch or pass below the lower band, close down, and have its body contain the current candle’s body. The bearish setup mirrors those conditions at the upper band, with the prior candle closing up. Signals open long or short positions, with fixed profit and loss exits set to 40 and 20 points.

The document provides source code and a description of the signal rules, but no backtest period, performance statistics, or evidence that the thresholds are effective. Although the source comments refer to Heikin-Ashi prices, the assigned values are the chart’s ordinary open, high, low, and close. The fixed exits are specified in points, so their practical scale depends on the instrument and chart. The reversal pattern and band touch alone do not establish that a trade will reverse.

Key ideas

• The strategy combines outer Bollinger Band touches with a candle body containment pattern.
• A lower-band touch followed by a contained candle after a down candle generates a long signal.
• An upper-band touch followed by a contained candle after an up candle generates a short signal.
• Each entry uses a fixed 40-point profit target and 20-point stop loss.
• The document provides no performance results or tested markets.

Tags

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