[LazyBear] SQZ Momentum + 1st Gray Cross Signals

The [LazyBear] SQZ Momentum + 1st Gray Cross Signals indicator provides a specialized implementation of the Squeeze Momentum indicator, featuring automated signals based on the "first gray cross" method described in John F. Carter's "Mastering the Trade". It aims to identify high-probability entries by detecting the exact moment a squeeze is released and momentum begins to shift.

Usage

The tool is designed to highlight trend continuation and breakout opportunities following a period of low volatility.

• Long Signals: Occur when a squeeze is released (gray cross) and the momentum value is positive and increasing. These are marked by upward-pointing arrows below the bars.
• Short Signals: Occur when a squeeze is released (gray cross) and the momentum value is negative and decreasing. These are marked by downward-pointing arrows above the bars.
• Momentum Histogram: The histogram displays the strength and direction of the trend. Brighter colors indicate increasing momentum, while darker/faded colors indicate waning momentum.
• Squeeze Dots: Small crosses at the zero line indicate the squeeze status. A black/gray cross indicates the squeeze has been released, while other colors represent the active squeeze state.

Details

This script is a modification of the popular Squeeze Momentum indicator by LazyBear. It specifically automates the strategy from Chapter 11 of "Mastering the Trade," which suggests entering a position on the first gray dot (squeeze release) after a black dot (active squeeze), provided the direction matches the momentum.

The implementation uses Bollinger Bands and Keltner Channels to identify the "Squeeze" (when Bollinger Bands are inside Keltner Channels). The momentum component is derived from a linear regression of the price's position relative to its average range.

Settings

Bollinger Bands

• BB Length: The lookback period for the Bollinger Bands calculation.
• BB MultFactor: The standard deviation multiplier for the bands.

Keltner Channel

• KC Length: The lookback period for the Keltner Channels.
• KC MultFactor: The multiplier for the average true range to determine channel width.
• True Range (KC): Toggle to use the True Range instead of high-low for Keltner calculation.

Visibility & Signals

• Multiple Timeframes: Allows users to anchor signals to a specific timeframe or follow the current chart timeframe.
• Plot Histogram/Crosses: Toggle the visibility of the momentum histogram and center crosses.
• Show Bearish/Bullish Signals: Toggles the entry arrows for short and long positions.
• Bear/Bull Arrow Length: Adjusts the visual length/style of the signal arrows for better chart visibility.

FAQ

How do I interpret the histogram colors?

Bright green indicates positive momentum is increasing; dark green indicates positive momentum is decreasing. Bright red indicates negative momentum is increasing (downward); dark red indicates negative momentum is decreasing.

What does "Squeeze Released" mean?

A squeeze is "released" when the Bollinger Bands expand outside of the Keltner Channels, often signaling a volatility breakout. This script specifically triggers signals on the first bar where this release occurs.

How can I access [LazyBear] SQZ Momentum + 1st Gray Cross Signals?

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