TTM Sqz

The TTM Sqz indicator is a volatility and momentum tool that identifies periods of consolidation and potential explosive price breakouts by analyzing the relationship between Bollinger Bands and Keltner Channels.

Usage

The Usage section focuses on identifying "Squeezes" and momentum shifts. When the Bollinger Bands trade inside the Keltner Channels, the market is considered to be in a "Squeeze" (represented by dots on the zero line), signaling low volatility and potential consolidation. When the Bollinger Bands expand outside the Keltner Channels, the squeeze "fires," often indicating the start of a new trend.

• Squeeze On: Indicated by dots on the zero line (typically black/white depending on chart theme), suggesting a period of compression.
• Squeeze Off: Indicated by grey dots, suggesting volatility is increasing and the squeeze has released.
• Momentum Histogram: The oscillator bars around the zero line indicate the direction and strength of the trend. Bright green/red bars suggest increasing momentum, while darker/faded bars suggest waning momentum.

Details

The indicator is based on the concept that periods of low volatility are usually followed by periods of high volatility. To measure this, it compares:

1. Bollinger Bands: Measuring standard deviation from a moving average.
2. Keltner Channels: Measuring Average True Range (ATR) or price range relative to a moving average.

The momentum component is calculated using a linear regression of the price relative to the average of the high/low range and a Simple Moving Average (SMA). This provides a smoothed representation of whether the price is trending upward or downward relative to its recent mean.

Settings

• BB Length: Determines the lookback period for the Bollinger Bands calculation.
• BB MultFactor: Sets the standard deviation multiplier for the width of the Bollinger Bands.
• KC Length: Determines the lookback period for the Keltner Channels.
• KC MultFactor: Sets the multiplier for the range used to calculate Keltner Channels.
• Use TrueRange (KC): A toggle to use either the True Range or the simple High-Low range for Keltner Channel calculations.

FAQ

How do I interpret the histogram colors? Bright green indicates bullish momentum is increasing, while dark green indicates bullish momentum is slowing. Bright red indicates bearish momentum is increasing, while dark red indicates bearish momentum is slowing.

When is a trade signal generated? Typically, traders look for the "Squeeze" dots to change from the "On" state to the "Off" (grey) state while observing the histogram color to determine the direction of the potential breakout.

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