Smart Flow Bands

How the Sell Signal Works

1. Bollinger Band condition

• The current candle must close at or above the Upper Bollinger Band.

• This signals potential overbought conditions.

2. OBV confirmation (On Balance Volume)

• OBV must be falling → OBV_now < OBV_prev .

• Stronger confirmation: OBV decreasing for 2–3 consecutive bars.

• This shows that buying pressure is weakening.

3. ATR filter (Average True Range)

• Current ATR must be below its moving average (e.g., ATR_now < ATR_SMA(14) * 1.2 ).

• Purpose: avoid entering sells when the market is too volatile (false breakouts).

4. Price action confirmation (optional but recommended)

• A bearish candle forms after the Upper BB touch.

• Example: candle closes lower than the middle of the previous bar or below the Bollinger middle line.

• This adds price confirmation to the signal.

✅ If all the above are true → Sell signal is generated.

Stop Loss (SL) & Take Profit (TP)

• Stop Loss (SL):

  • Above the Upper Bollinger Band by + 0.5 * ATR

  • Or above the recent swing high (safer option).

• Take Profit (TP):

  • TP1: Middle Bollinger Band (partial exit).

  • TP2: Lower Bollinger Band

  • Or use fixed Risk:Reward (e.g., 1:1.5 or 1:2).

• Dynamic Exit Rule:

  • Exit early if price closes above Middle BB (invalidates sell).

  • Exit if OBV turns upward (OBV_now > OBV_prev → money flow back to buying).

Risk Management

• Risk 1–2% max per trade.

• Limit to 1 trade per timeframe per day to avoid overtrading.

• Avoid trading during major economic news.

When NOT to sell

• ATR is above filter level ( ATR_now > ATR_SMA * 1.2 ).

• OBV not declining.

• Candle closes above Upper BB again (breakout continuation).

Pseudo-Code Logic

Practical Notes

• Best timeframes: H1, H4, Daily (stronger signals).

• Scalping (M1–M15) works but has more noise.

• Always backtest & demo test before real money use.