Squeeze Index

The Squeeze Index measures how hard price is being squeezed, expressed as a percentage — the higher the reading, the tighter the coil. It is a direct gauge of the market's contraction phase: as ranges tighten and price goes stationary, the index climbs, flagging the conditions that precede a directional break. Under the hood it tracks the distance between converging exponential envelopes — borrowing the mathematics of damping — takes its logarithm, and scales the result with a correlation oscillator.

How to Trade the Squeeze Index?

• High readings: intense compression; price is winding into a narrow range, and a breakout becomes the scenario to prepare for.
• Falling from a peak: the squeeze is releasing — the break's direction, not the index itself, tells you which side to trade.
• Low readings: price is moving freely, and breakout tactics have little to grip.

The relationship between the two main inputs decides sensitivity: a Convergence Factor above the Length flags more areas of compression, while a Length above the Convergence Factor flags fewer. Matching the two values — or setting the Convergence Factor to roughly double the period — is the recommended starting point. Very high Convergence Factors can occasionally read a sharp retracement as a squeeze, so check elevated readings against the actual range.

Squeeze Index Settings

• Convergence Factor: governs the convergence of the exponential envelopes; higher values detect more compression areas.
• Length: the indicator's period; lengthening it relative to the Convergence Factor makes squeezes rarer.
• Src: the source series for the calculation.

Frequently Asked Questions

How is this different from classic squeeze tools?

Most squeeze studies declare a binary on/off state; the Squeeze Index scores compression continuously as a percentage, so consolidations can be ranked by intensity rather than merely detected. If you prefer the on/off style, compare it with the TTM Squeeze and note how the two treat the same congestion.

What settings should I start from?

Keep the Convergence Factor equal to the Length, or roughly double it — those ratios give the cleanest behavior. Pushing the Convergence Factor far above the period surfaces more squeezes but raises the odds a retracement gets mistaken for compression.

Is the Squeeze Index free?

Yes, it is free on the LuxAlgo Library. This page can also launch it inside Quant, LuxAlgo's AI, so you can backtest how squeezes have resolved on your symbol before trading the next one.