Bollinger Band Breakout Playbook

Execution snapshot

Market regime
Prolonged compression followed by directional expansion.

Primary pairs
Alts poised for news catalysts; majors ahead of macro events.

Typical bands
first_band bbm (length 20, std 2) vs second_band bbu or bbl.

Signal rule
Long when price and bbm close above bbu; short when closing below bbl.

Why this works

Bollinger Bands adapt to recent volatility. When the distance between the upper and lower band contracts sharply, it signals a volatility squeeze. Breakouts that close outside the envelope often precede sustained runs as traders chase the expansion. QuantRelay detects these transitions through band crossovers, automating the confirmation step.

Configuring in QuantRelay

first_band: bbm with length=20 and std=2 (classic settings). Consider length=34 on higher timeframes.
second_band: bbu for long bias, bbl for short bias. Combine both to scan for two-sided breakouts.
To require narrower squeezes, lower std to 1.8 and filter by score in the index to highlight strong tests.
Pair with best_strategy containing “Static Long & Short” for dual-side automation.

Playbook

Before the move

Track bandwidth: add %b or ATR indicators to confirm compression.
Map nearby liquidity (previous highs/lows) to anticipate breakout targets.

During the break

Enter on the close outside the band or on the next candle’s open if using automation.
Require volume expansion above the 20-period average to avoid fake moves.

Managing the trade

Trail stops just inside the band envelope to stay in the expansion while respecting reversion signals.
Scale out at measured-move targets (range height projected from breakout) or when price returns inside the bands.

Risk controls

False positives are common in illiquid markets; limit to pairs with adequate order book depth.
News spikes can overshoot dramatically — predefine max slippage or use stop-limit orders.
During ranging sessions, combine with Donchian or Supertrend filters to confirm directional intent.

Going further

Stack Bollinger with Keltner channels (a “squeeze” setup) for earlier detection of tight ranges.
Monitor funding rates; extreme positive funding increases odds of upside fakeouts.
Archive standout runs with the admin copy tool to build a personalized breakout library.