Stochastic Oscillator and Bollinger Band 5 minute Trading Pattern

By | July 14, 2015

We have yet another pattern here that you can implement when trading. Its important that you demo this trading pattern before actually going live. The opportunities aren’t massively common, however if used accurately this can help improve the way you trade. This pattern can be used along with other trading patterns like support and resistance, price action and swing trading.

The stochastic oscillator is a momentum based indicator that uses support and resistance to determine its position and was developed by Dr. George Lane in the last 50s. It refers to a point in the current price in relation to the price range over a period of time.

The pattern is simple and can be applied to a 5 minute, 15 minute or 30 minute time frame. For this example lets use a 5 minute chart. The first condition you are looking for is a candle breaking the UPPER or LOWER Bollinger Band (obviously a bullish candle for the upper and bearish candle for the lower). Once this condition has been met you must then draw your attention to the Stochastic Oscillator. There are two white dotted lines, the upper line is known as the 80 line and the lower is known as the 20 line. We are looking for the stochastics to have traveled above the 80 line for a bullish candle traveling outside the upper Bollinger Band, or below the 20 line for a bearish candle traveling outside the lower Bollinger Band. Once you have identified this you are going to wait for the next candle to form before you get into the trade. Once the next candle has formed the stochastics lines should have crossed and be heading back towards the white line. If the stochastic lines have not yet crossed or they are becoming further apart do not take the trade, wait until all of the conditions are met. If the conditions have been met, place a trade in the opposite direction of the previous candle for 5 minutes.

Stochastic Oscillator and Bollinger Band 5 Minute Trdading Pattern explained on YouTube

In this example below you can see all of the conditions of the trade were met and the call would have indeed won for a 5 minute trade.


Basic Trading Tips:

Avoid USD/JPY or JPY pairs.
Avoid trading during news events
Don’t chase losses, move onto another asset


Try trading commodities
I find SILVER during the asian session works quite well
Look for volatility when trading currencies
Do not trade against short term aggressive trends

I hope you find some of this information useful and either implement this pattern or the Stochastic Oscillator into your own trading pattern as further confirmation. You can leave a comment below if you are unsure of anything!

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7 thoughts on “Stochastic Oscillator and Bollinger Band 5 minute Trading Pattern

  1. Mohd Najib Mohd Amin

    simply brilliant!!..i gained knowledge from day to day..thanks james

  2. Lawrence Mb

    Hi James, Thank you for the clearification, it sure does answer my question. Note to self, “If support or Resistant is broken do not trade this strategy instead look for a breakout trade opportunity. I can’t wait to start using this great strategy. Thanks again for the lovely video.

  3. James Frangleton

    Hey Lawrence!

    An interesting point. Generally we would differentiate based on support and resistance levels. For example, for my trend break out strategy I would look for a break in major resistance or support. Whereas in this strategy I would be looking for a ranging market where major resistance or support isn’t broken. You see, just because the price has broken upper or lower Bollinger band it doesn’t mean its broken any major support or resistance, it could still be bouncing around in a channel. I hope this answers your question. 🙂


  4. Lawrence Mb

    Hi James great Video, I have watched your other video of Bollinger band breakout (another interesting and educational video). My question is how do I differentiate between the two so I do not fall into the price fake out? As you said in this video when the Candle breaks below the Lower Bollinger we place a call. This could also be when the market is breaking out as in your previous video of Bollinger band breakout. It will be nice if you can summarise the two so I will be able to tell the difference when one or the other strategy is forming. I know the breakout is 30 minutes expiry while this is 5 minutes but what other things should I look for? Thanks for your help.

  5. James Frangleton

    Hey Beth,

    Thanks for your question! Yes you can use this strategy for 15 and 30 minutes, however I find 5 minute works best. I avoid JPY pairs because they are a little too volatile for this strategy in my opinion, you may find some success with it but in the long term I personally found it to be quite touch and miss.

    Hope this helped,


  6. Beth

    Well explained James, thank you. A quick couple of questions – to use for 15 or 30 minute, just change the chart length? Your tip to avoid JPY pairs – for this strategy only? Thanks

  7. Neal B. Finn

    Really good strategy. Will try it on Silver when I get the chance. James, you are the real deal and trader with integrity.


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