UCS Squeeze Momentum Overlay with Alerts

The UCS Squeeze Momentum Overlay with Alerts indicator is a comprehensive volatility and trend analysis tool that identifies market consolidation phases and signals potential momentum breakouts directly on the price chart.

Usage

The tool is designed to help traders identify "squeezes," which occur when market volatility drops significantly, often preceding a sharp price movement.

• Squeeze Identification: When Bollinger Bands contract within Keltner Channels, a "Squeeze On" state is triggered, represented by a red background highlight. This indicates a period of low volatility or ranging market conditions.
• Momentum Signals: The indicator uses triangle shapes above and below bars to signify momentum direction and strength.
  • Green Triangle Up: Positive momentum is increasing.
  • Blue Triangle Down: Positive momentum is slowing down.
  • Red Triangle Down: Negative momentum is increasing.
  • Blue Triangle Up: Negative momentum is slowing down.
• Trade Execution: Users can look for "Squeeze Released" signals, where the red background disappears, coupled with momentum direction to identify high-probability breakout entries.

Details

The script is a visual optimization of the classic Squeeze Momentum concept. It utilizes the relationship between Bollinger Bands (standard deviation-based) and Keltner Channels (ATR-based) to detect periods of compression.

The momentum calculation can be toggled between a Bollinger Band Ratio (%B) or a standard Rate of Change (ROC), which is then smoothed to filter out market noise. Additionally, it features an optional Heikin Ashi optimization, which uses HA-based price and ATR calculations to provide a smoother representation of trend and volatility transitions.

Settings

• Squeeze Length: The lookback period used for Bollinger Bands and Keltner Channels calculations.
• BB MultFactor: The standard deviation multiplier for the Bollinger Bands.
• KC MultFactor: The ATR multiplier for the Keltner Channels.
• Momentum Smoothing: The period used to smooth the momentum oscillator values.
• Use Bollinger Band Ratio Instead of Momentum: When enabled, uses %B for momentum; when disabled, uses Rate of Change (ROC).
• Heikin Ashi Optimization: When enabled, the indicator uses Heikin Ashi price data and modified ATR for its internal calculations.

FAQ

How do I interpret the red background?

the red background indicates a "Squeeze On" state, meaning the market is currently in a low-volatility consolidation phase where price is compressed.

What are the best timeframes for this tool?

While it can be used on any timeframe, it is particularly effective on lower timeframes for volatile assets like Forex pairs and Bitcoin to catch rapid breakouts.

How can I access this indicator?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.