How to Use Bollinger Bands and RSI for Profitable Trades

00:00 - Hello trader!!! Welcome back 
to the ComLucro Channel!!! Today, we’re excited to share an 
incredible strategy we’ve discovered,   combining Bollinger Bands and RSI to help 
traders pinpoint high-probability setups   with precision. Whether you’re new to trading 
or already have experience, mastering these   two indicators can give you a serious edge and 
transform the way you navigate market conditions.
00:20 - Here at ComLucro, our mission is clear: to 
provide you with practical, no-nonsense strategies   and techniques that help you become a more 
confident and disciplined trader. No gimmicks,   no shortcuts—just actionable 
insights you can trust. In this video, we’ll not only break down the 
basics of Bollinger Bands and RSI but also show   you how to pair them to build a highly effective 
trading strategy. You’ll learn how to identify  
00:44 - optimal entries, avoid common pitfalls, and 
maximize your potential in any market scenario. Be sure to check out our other videos 
and free courses on the channel,   like the Wyckoff Method Course and Smart 
Money Concepts. Don’t forget to visit our   website for even more resources to 
take your trading to the next level. After this quick intro, we’ll 
jump straight into the world of  
01:02 - Bollinger Bands and unlock their 
full potential—so stay tuned! Hey traders! If you're looking to level up 
your trading game, give this video a thumbs up,   subscribe to the channel, and hit that 
notification bell so you never miss an update. Before we dive in, we highly recommend checking 
out our playlists on trading psychology and risk   management. These videos can significantly help 
you manage emotions, maintain discipline, and  
01:27 - develop effective risk management strategies—key 
elements for achieving profitability in trading. Please, listen and remember! No amount 
of study to find the perfect trading   strategy will benefit you if you lack 
emotional control during your trades.   If you cannot accept a losing trade and 
keep moving your stop loss, or worse,   trade without a stop loss, you are 
setting yourself up for failure.
01:50 - The efficiency of your strategy is directly 
tied to your risk management and emotional   discipline. Only when a trader understands and 
implements this can they start seeing consistent   profits and end their months in the green. 
Without these critical elements, even the best   strategies will crumble under poor execution and 
emotional decision-making. Now, let's get started! Let’s start by setting up the Bollinger 
Bands. If you’re new to using Bollinger Bands,  
02:18 - you’ve made the right choice clicking on 
this video because this indicator is a   game-changer for identifying key support and 
resistance levels in the market. To begin,   open your charting platform—whether 
it’s TradingView or any other   tool you prefer—click on the indicators 
tab, and search for "Bollinger Bands." The default settings on TradingView 
are fine, but for this strategy,  
02:38 - we’ll need to make some adjustments. First, go 
to the length section and set the value to 30.   Make sure the standard deviation remains at 
2. After that, I personally like to remove   the background shading from the indicator 
and change the lines to red. This step is   entirely up to your personal preference, so 
feel free to customize it as you see fit. Now, if you’re unfamiliar with how 
Bollinger Bands work, here’s a quick  
02:60 - breakdown. The center line represents a 
moving average, calculated by going back   over a defined number of candlesticks—30 
in this case—and averaging their values.   The upper and lower lines indicate the standard 
deviation, which helps measure price volatility. Now that the Bollinger Bands are set up, let’s 
move on to adding the RSI. Open your indicators   tab, type in "RSI," and select the option labeled 
"Relative Strength Index." Once the RSI is added  
03:26 - to your chart, we’ll make a few adjustments to its 
settings. Set the upper band to 70 and the lower   band to 30. By default, the length is usually 
14, but for this strategy, we’ll change it to 13. For those unfamiliar with the RSI, 
it’s a highly effective tool for   determining whether an asset is overbought 
or oversold. When the RSI line is above 70,   it indicates that the asset is overbought, 
meaning it might be due for a pullback. When  
03:51 - the line is below 30, it signals that the asset 
is oversold, suggesting a potential rebound. Now it’s time to combine these two indicators and 
start spotting profitable trade opportunities.   Stick around, because later in this video, 
I’ll share a crucial tip that can take   this strategy from being just decent to 
becoming a powerful money-making tool. There are two main strategies we can use with 
these indicators, both grounded in the concept  
04:15 - of mean reversion. If you’re not familiar with 
this term, here’s a quick explanation: "Mean"   refers to the average price, while "reversion" 
means moving back toward it. In simple terms,   mean reversion is the idea that, after 
significant price movements, the market tends   to return to its average level. This is the core 
principle behind the strategies we’ll explore. Let’s look at an example. After an extreme price 
movement in one direction—either up or down—it’s  
04:41 - common to see the price eventually return to 
the average, which in this case is the moving   average. If the price moves above the upper 
Bollinger Band, that’s a signal to consider   entering a short trade. If it moves below 
the lower Bollinger Band, it’s a signal to   consider entering a long trade. Sounds simple, 
right? But if you were to rely solely on this,   the chances are it wouldn’t work consistently. 
That’s exactly why we’ve added the RSI to the mix.
05:05 - Here’s why: the price often moves above or 
below the Bollinger Bands multiple times,   which can lead to many false signals. If 
you entered a trade each time this happened,   you’d likely lose money. To 
filter out these false signals,   we’ve added a crucial condition—only trade 
when the RSI reaches an extreme value. Specifically, enter a long trade only 
when the price drops below the lower  
05:26 - Bollinger Band and the RSI falls below 25. 
Similarly, enter a short trade only when the   price moves above the upper Bollinger 
Band and the RSI rises above 75. This   additional layer of confirmation helps 
improve the reliability of your trades. Here’s an example using Apple. The price 
dips below the lower Bollinger Band,   but the RSI hasn’t yet hit our target 
level. So, we hold off. A bit later,  
05:49 - the RSI drops below 25, even 
reaching 20. At that point,   we enter a long trade, and as anticipated, 
the price eventually returns to the average. Now, there’s a critical detail you need 
to understand for this strategy to work   effectively. Without this insight, you risk 
losing money. The main challenge comes when   the market is moving sideways. During these 
periods, predicting price movements becomes  
06:11 - significantly harder, and the usual 
signals can lead to unreliable trades. Here’s an example where things can go wrong. 
The price drops below the lower Bollinger Band,   and the RSI falls below 25, yet 
the price continues to decline.   If you entered a trade here, 
you’d face a significant loss. To avoid situations like this, here’s a helpful 
trick. Notice how in this example the Bollinger  
06:33 - Bands are extremely narrow, closely hugging 
the price. The RSI is also relatively flat,   staying within a tight range inside the purple 
rectangle without hitting any major extremes.   This is a clear warning sign. When the market 
behaves like this for an extended period,   any breakout is likely to carry strong 
momentum in one direction. In these cases,   it’s best to avoid trading and resist the 
temptation to "catch a falling knife."
06:56 - Here’s another way to refine this 
strategy. Take a look at this example:   the price drops to the lower Bollinger Band 
and bounces back. The next time it moves down,   it forms a new lower low. However, here’s where it 
gets interesting—the RSI forms a higher low. This   is called divergence, and it’s a powerful signal 
to enter a trade. Divergence is especially strong   if the RSI was previously below 25 and the price 
had already touched the lower Bollinger Band. When  
07:24 - you see this setup, there’s a high probability 
the price will reverse and make a higher high. In conclusion, combining Bollinger Bands 
and RSI provides a powerful strategy for   identifying high-probability trades, 
especially when spotting key setups   like divergence. By mastering this 
approach and applying it consistently,   you can significantly enhance your 
trading accuracy and confidence.
07:44 - Don’t forget to take advantage of the free 
courses available right here on our channel.   Whether you want to understand market 
behavior with the Wyckoff Method Course,   build a strong foundation with the 
Technical Analysis for Day Traders Course,   or dive into the mindset of institutional 
traders with the Smart Money Concepts Course,   we have resources to help you sharpen 
your skills and elevate your trading game.
08:05 - Wishing you success in your trading journey, 
and as always, best of luck in your trades! I hope you enjoyed today's video. If 
you found the content useful or fun,   please give it a like, as this helps 
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08:27 - your friends or on your social networks 
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markets. Thank you for watching and good trading!