Bollinger Band Mean Reversion with Pinbar Entry and Dual Targets

Summary

This long-entry strategy looks for a return inside the lower Bollinger Band after the previous bar's high remained below that band. It treats the pattern as a possible oversold reversal, with the band center as the first profit target and the upper band as the second. A stop is associated with the previous bar's low, while the band width adjusts with recent price variability. The listed settings use a 20-period band and a two-standard-deviation width.

The document describes an ETH/USDT futures example using two-hour bars over about a year, but gives no performance statistics. Mean reversion can fail in a persistent downtrend, and a close-based confirmation may produce a late entry; a nearby prior low can also be vulnerable to ordinary volatility. The source places two exits but does not explicitly specify partial position sizes, despite the prose describing partial exits. Its stop check occurs inside the entry condition, so the implementation may not provide ongoing stop protection after entry. These implementation and evidence limits make the stated advantages unverified.

Key ideas

• A long signal occurs when the prior bar's high is below the lower band and the current close returns above it.
• The middle band and upper band serve as successive profit targets.
• The prior bar's low is used as the stop reference when stop loss is enabled.
• Mean reversion may fail during sustained trends, and prior-low stops may be vulnerable to market noise.
• The ETH/USDT futures example gives no performance results, and the source does not clearly implement partial exits or ongoing stop checks.

Tags

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