Squeeze Momentum

The Squeeze Momentum Indicator (often called "TTM Squeeze" or just "Squeeze") is a technical analysis tool used by traders to identify periods when a security is likely to experience increased volatility and potential price breakouts. This version is a derivative of John Carter's "TTM Squeeze" volatility indicator, as discussed in his book "Mastering the Trade" (chapter 10).

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Manufacturer: nt8indicators

SKU: SQMOM

Vendor: nt8Indicators

$9.90

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How It Works

The Squeeze Momentum Indicator is based on two key ideas:

Volatility Compression ("Squeeze"): It detects when volatility is low and the price is "squeezed" between the Bollinger Bands and Keltner Channels.
Momentum Direction: It shows whether bullish (upward) or bearish (downward) momentum is building up.

Components:

Bollinger Bands: These measure volatility above and below a moving average.
Keltner Channels: Another volatility-based envelope, but usually less sensitive than Bollinger Bands.

The Squeeze Signal:

Squeeze On: When the Bollinger Bands go inside the Keltner Channel, it signals low volatility ("squeeze on"). This is often shown as a red dot or bar.
Squeeze Off: When the Bollinger Bands move outside the Keltner Channel, it signals increasing volatility ("squeeze off"). This is shown as a green dot or bar.

Momentum Histogram:

The indicator usually includes a histogram that turns positive (bullish) or negative (bearish) based on momentum calculations (often using a variation of the Rate of Change or linear regression).

How Traders Use It

Squeeze On: Indicates a period of low volatility, often preceding a breakout (big move) in either direction.
Squeeze Off: The breakout is happening and traders look at the momentum histogram to judge the likely direction.
Momentum Bars: Green or positive bars suggest bullish momentum; red or negative bars suggest bearish momentum.

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