Hello,
How can I identify a trend or trend reversal (counter-trend) using RSI, Stochastic, and Bollinger Bands?
What are the recommended settings for RSI, Stochastic, and Bollinger Bands?
It really makes very little sense to start off by deciding which indicators you want to use, to display something.
Indicators are your servants, not your masters.
You need to approach things from a different direction: work out what it is you want to identify (in this case, apparently, “trend” or “trend-reversal” - both terms that need a clear definition before proceeding further!), and after that, select the indicators which can display it.
It’s impossible to work out why you’ve apparently decided that RSI, stochastic and BB’s are what you need, here. Apologies if I come across as dismissive or anything similar, but the details of what you’re asking for really are going to make it (unnecessarily) difficult for you to use it to serve the need you’ve hinted at.
They naturally vary, according to what you’re trying to do and how you’re trying to do it.
For RSI, the lowest setting I’ve seen successfully used is 2 (Connors and Raschke, and re-used by many other traders and systems), and the highest is 200 (for a double RSI crossover method used by a European investment bank).
For stochastics, I’ve seen everything from 5/3/2 up to huge numbers.
For BB’s, I’ve seen everything from 10/1.0 up to 250/2.5 used for different purposes.
Be aware that RSI and stochastics, for displaying trend, are similar things used in similar ways, and that all these indicators were originally designed for trading stocks, not forex, and from daily charts, nothing faster.
If you describe in more detail exactly what you’re trying to do, and why, you’re bound to get more helpful answers, @shanmugapradeep .
The section on indicators in the fee Babypips course will also, almost certainly, help you.
Here are three other useful links about RSI, Stochastic and BB’s, since these are the three indicators you’ve mentioned specifically -
Hope it helps!
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I don’t know about your trading experience, trading style, and the timeframe you use for forex trading.
However, you should focus on understanding the market structure so that you may be able to identify a trend, counter-trend (reversal), or rangebound market.
You may use only one moving average for confirmation/confluence per your trading method.
Start with this simple method and try to improve your strategy by reading about Price Action, Candlestick patterns, etc., from the School of Pipsology.
I hope you will learn and improve your trading much faster than by using your suggested indicators.
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