Bollinger Bands Filter
Bollinger Bands is a classic indicator that uses a simple moving average of 20 periods, along with plots of upper and lower bands that are 2 standard deviations away from the basis line. These bands help visualize price volatility and trend based on where the price is, in relation to the bands.
Bollinger Bands filter plots a long signal when price closes above the upper band and plots a short signal when price closes below the lower band. It doesn't take into account any other parameters such as Volume/RSI/ Fundamentals etc, so user must use discretion based on confirmations from another indicator or based on fundamentals.
The filter works great when the price closes above/below upper/lower bands with continuation on next bar. It is definitely useful to have this filter along with other indicators to get early glimpse of breach/fail of bands on candle close during BB squeeze or based on volatility.
This can be used on Heikin Ashi candles for spotting trends, but HA candles are not recommended for trade entries as they don't reflect true price of the asset.
This filter's default is 55 SMA and 1 standard deviation, but these can be changed from settings.
It is definitely worth reading the 22 rules of Bollinger Bands written by John Bollinger.
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Note:
1. Alerts can be created for long and short signals using "Once per bar close".
2. The indicator doesn't repaint.
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