What is the MACD and Bollinger Bands strategy?

The MACD and Bollinger Bands strategy refers to a trading method that makes use of both indicators in analyzing and trading the markets. The combination of MACD and Bollinger Bands may offer more insight into the current market and help predict how it could move in the future.

What is the difference between MACD and Bollinger Bands?

While the MACD indicator is a momentum oscillator that is primarily used to analyze trends, Bollinger Bands is a volatility channel indicator that helps determine whether prices are high or low on a relative basis. As such, you can combine both to get a suitable strategy, which can be a trend-following strategy or a mean-reversion strategy.

How to use Bollinger & MACD trend trading strategy?

Use the lower (higher) band as a stop loss in an uptrend (downtrend). The EUR/USD chart below depicts the Bollinger and MACD trend trading strategy. The MACD confirms the uptrend with MACD line above the signal line and both lines are above the zero mark. This sets the filter that traders should only be looking to enter long trades.