Squeeze Momentum Indicator [LazyBear] with OBV

The Squeeze Momentum Indicator [LazyBear] with OBV tool combines classic squeeze volatility analysis with linear regression bull/bear power and volume-based momentum to provide a comprehensive view of market trends and breakouts.

Usage

The indicator can be used to identify periods of low volatility (squeezes) and the subsequent explosive moves that often follow.

• Squeeze Dots: The center line dots indicate the squeeze status. When the Bollinger Bands are within the Keltner Channels, a "squeeze" is occurring, suggesting a potential breakout is imminent.
• Histogram: The central histogram represents the squeeze momentum. Green bars indicate rising bullish momentum, while red bars indicate falling bearish momentum. Darker shades signify weakening momentum in the respective direction.
• Bull & Bear Columns: The background columns represent Linear Regression Bull and Bear power. These help visualize which side is currently dominating the price action.
• Direction Line: A smoothed line (ALMA by default) that aggregates bull and bear power to show the prevailing trend direction.
• OBV Oscillator: The line and area at the bottom represent an On Balance Volume (OBV) oscillator. It measures buying and selling pressure by comparing volume to price movement, providing confirmation for the price-based momentum signals.

Details

This script integrates three distinct technical concepts into a single oscillator pane:

1. Squeeze Momentum: Based on the work by LazyBear, it uses the relationship between Bollinger Bands and Keltner Channels to identify volatility cycles.
2. Linear Regression Power: It calculates the "expansion" of price relative to its recent highest highs and lowest lows to determine the strength of buyers and sellers.
3. OBV Oscillator: It transforms the cumulative On Balance Volume into an oscillator by subtracting its EMA, making it easier to identify volume-weighted trend shifts.

Settings

Bollinger Bands & Keltner Channels

• BB Length: The period used for Bollinger Band calculations.
• BB MultFactor: The standard deviation multiplier for Bollinger Bands.
• KC Length: The period used for Keltner Channel calculations.
• KC MultFactor: The multiplier for the Keltner Channel range.
• Use TrueRange (KC): When enabled, uses True Range instead of High-Low for Keltner Channels.

Linear Regression Power

• Lookback Window: The period used to find the highest highs and lowest lows.
• Smooth?: Toggles smoothing for the direction line.
• Smooth factor: Adjusts the period of the ALMA smoothing.
• Sigma: Adjusts the sigmoid shape of the ALMA smoothing for more or less responsiveness.

FAQ

How do I interpret the squeeze dots?

When the center line dots change color to indicate a squeeze, the market is in a period of consolidation. A change in color back to the "off" state signifies that the squeeze has fired, typically leading to a directional move.

What does the OBV Oscillator confirm?

The OBV Oscillator confirms price momentum with volume. If price momentum is rising but the OBV oscillator is falling, it may indicate a divergence and a weakening trend.

How do I access this script?

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