Squeeze Momentum Indicator Fixed

The Squeeze Momentum Indicator Fixed tool identifies periods of market consolidation and potential volatility breakouts by combining Bollinger Bands and Keltner Channels with a momentum oscillator.

Usage

The indicator consists of a momentum histogram and a series of "squeeze" dots on the zero line.

• Squeeze Dots: When the Bollinger Bands trade within the Keltner Channels, the "Squeeze is ON" (indicated by the chart's foreground color), suggesting a period of low volatility and consolidation. When the Bollinger Bands expand outside the Keltner Channels, the "Squeeze is OFF" (gray dots), suggesting volatility has increased and a move is underway. Neutral conditions are represented by blue dots.
• Momentum Histogram: The histogram values represent the distance of the price from the average of the range and moving average, smoothed using linear regression.
  • Bright Green: Positive momentum increasing.
  • Dark Green: Positive momentum decreasing.
  • Bright Red: Negative momentum increasing.
  • Dark Red: Negative momentum decreasing.

Traders often look for the "squeeze" to fire (dots changing from the squeeze color to gray) as a signal that a significant move is beginning, using the histogram color to determine the direction.

Details

This implementation is based on the classic John Carter Squeeze technique. It calculates the relationship between Bollinger Bands (standard deviation-based) and Keltner Channels (ATR-based). A "squeeze" occurs when volatility, as measured by Bollinger Bands, falls below the historical volatility measured by Keltner Channels. The momentum component uses a linear regression of the price relative to the average of the high/low range and a simple moving average to provide a directional bias.

Settings

• BB Length: Sets the period for the Bollinger Bands calculation.
• BB MultFactor: Adjusts the standard deviation multiplier for the Bollinger Bands.
• KC Length: Sets the period for the Keltner Channels and the momentum linear regression.
• KC MultFactor: Adjusts the multiplier for the Keltner Channels range.
• Use TrueRange (KC): When enabled, the Keltner Channels use the True Range; otherwise, they use the simple High - Low range.

FAQ

How do I interpret the histogram colors?

Bright colors (Bright Green/Bright Red) indicate that momentum is accelerating in that direction, while darker shades suggest that the current trend's momentum is slowing down.

What does it mean when the dots are gray?

Gray dots indicate that the Bollinger Bands are outside the Keltner Channels, meaning the market is currently in a state of released volatility (the squeeze has "fired").

How can I access this indicator?

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