If you aren’t aware of what these indicators are, the Bollinger bands are a type of envelope that is plotted at standard deviation levels above and below a moving average. First, it identifies when the Bollinger bands are trading inside of the Keltner Channels (or when they are in a squeeze) and then a momentum index oscillator shown by the histogram bars. The squeeze is made up of a few different measures. If trading directionally its your job to identify those moments in time where a greater than expected move is likely. The markets spend a lot of time in trading ranges, building up energy for the next squeeze to release energy and shift from compression of price movement to expansion. As a directional trend trader its a great way to identify stocks that are preparing to make their next move on any timeframe. The squeeze is based on the idea that markets tend to compress or ‘squeeze’ in quiet ranges before they are ready to move or expand out of those ranges. I’m a big believer on letting price action confirm your assumption on a trade but having a technical setup or system is a great way to filter out the noise as well. It’s been one of the few indicators I focus on besides price action and volume to catch larger than expected price moves. I’m often referring to an indicator called the TTM Squeeze, created by John Carter and featured in his great book, Mastering the Trade.

Squeeze momentum indicator mt5