Squeeze Momentum Indicator Version2 by KıvanÇ fr3762

The Squeeze Momentum Indicator Version2 by KıvanÇ fr3762 tool identifies volatility-based market consolidation and momentum shifts by combining Bollinger Band and Keltner Channel squeezes with a signal line for trade timing.

Usage

The Usage section describes how the script can be used, examples should be provided in this section. This tool is primarily used to identify periods of low volatility (the "squeeze") and the subsequent momentum breakouts.

• Momentum Crossovers: The indicator replaces the traditional histogram with a continuous line. A bullish signal is generated when the blue momentum line crosses above the red signal line. Conversely, a bearish signal occurs when the blue line crosses below the red signal line.
• Squeeze Detection: Crosses plotted on the zero line indicate the squeeze status. When the Bollinger Bands trade inside the Keltner Channels, a squeeze is "on," signifying a period of consolidation. When the Bollinger Bands expand outside the Keltner Channels, the squeeze is "released," often leading to a directional move.
• Zero-Line Transitions: Users can monitor when the momentum line crosses the zero level to confirm changes in the broader trend direction (positive vs. negative momentum).

Details

The script is a modified version of the original Squeeze Momentum Indicator by LazyBear, adapted by KıvanÇ. It calculates the relationship between Bollinger Bands and Keltner Channels to determine volatility compression. The momentum component is derived from a linear regression of the price relative to the average of the historical high/low range and a Simple Moving Average (SMA).

A key modification in Version 2 is the conversion of the momentum histogram into a line plot and the addition of a signal line (a 5-period SMA of the momentum value). This allows for earlier entry and exit signals based on moving average crossovers rather than waiting for zero-line transitions or histogram color changes.

Settings

• BB Length: Determines the lookback period for the Bollinger Bands calculation.
• BB MultFactor: Sets the standard deviation multiplier for the Bollinger Bands width.
• KC Length: Sets the lookback period for the Keltner Channels.
• KC MultFactor: Sets the multiplier for the Keltner Channels, typically using the Average True Range (ATR) or Simple Range.
• Signal Length: Defines the period for the Simple Moving Average (SMA) used as the red signal line.
• Use TrueRange (KC): A toggle to choose between using True Range or a simple High-Low range for Keltner Channel calculations.

FAQ

How do I interpret the colors on the zero line? The crosses on the zero line indicate the volatility state: a specific color indicates a squeeze is active (Bollinger Bands inside Keltner Channels), while another color indicates the squeeze has been released.

What is the advantage of using a signal line over the traditional histogram? The signal line provides a reactive trigger for momentum shifts, allowing traders to identify potential trend changes before the momentum line crosses the zero threshold.

How can I access the Squeeze Momentum Indicator Version2 by KıvanÇ fr3762? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.