Extra indicators

Squeeze Momentum

Shows when volatility is unusually compressed (the squeeze) and which way momentum points when it is released.

The idea in plain words

Quiet markets tend to be followed by lively ones. When Bollinger Bands fit inside Keltner Channels the market is "squeezed"; when they move outside again, a move often begins. A momentum histogram shows the likely direction.

How it is calculated

Squeeze on (dark dots) when Bollinger Bands (20, 2) are inside Keltner Channels (20, 1.5); off (grey dots) otherwise. Momentum = linear regression of the price minus the midpoint of its 20-candle range and its SMA.

Squeeze = BB(20, 2) inside KC(20, 1.5)
Momentum = LinReg(close − ((HH + LL)/2 + SMA)/2, 20)

How to use it

Wait for the squeeze to end (dots turn grey), then follow the histogram's side of zero.

Drawing conclusions

Bright bars: momentum growing; faded bars: momentum fading.

Example

ETHUSD H1: six hours of dark dots, then grey dots with a growing green histogram; the breakout above the range follows.

Prices in examples are illustrative.

Watch out for

A squeeze can resolve with a false start in the other direction.

A little history

Based on John Carter's TTM Squeeze ("Mastering the Trade", 2005); this version follows the widely shared open-source form.

Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.