KT BB Squeeze Indicator
MT4 | MT5

Features of BB Squeeze Indicator

• Unlike the other BB Squeezes, this one is light, full of features, and coded from scratch.
• It marks the potential entry points by placing vertical lines when the entry conditions match.
• Provide optimal results in every time frame.
• BB Squeeze offers a more straightforward trading experience, with entry signals and trend assessment in the same indicator.
• All kinds of Metatrader alerts for entries and exits (fading momentum).
  
  

Input Parameters

• History Bars: The number of history bars for the indicator calculation.
• Momentum Period: The period that decides the momentum detection.
• Bolling Bands Period: The period for the Bolling Bands calculation.
• Bollinger Bands Deviation: The standard deviations for the Bollinger Bands.
• Keltner Channels Period: The period to calculate the Keltner channels.
• Keltner Channels Multiplication: the multiplier for the Keltner channels.
• Draw Signal Lines: If true, the indicator will plot the vertical line on each buy/sell signal.
• Alerts for Fading Momentum (Exits): If true, the indicator will send the alerts when momentum starts decreasing.
• The rest of the input parameters are self-explanatory.

Understanding the BB Squeeze Setup

Markets tend to move from a period of low volatility to high volatility and vice-versa. John Carter's book Mastering the Trade reveals a simple way to determine volatility contraction (squeezing) and expansion using the Bollinger Bands and Keltner channels.

If Bollinger Bands are inside the Keltner channels, the market will likely be in a phase of the sideways market and low volatility. Conversely, if Bollinger Bands are outside the Keltner channels, the market will likely be in a trending and high volatility phase.

According to John Carter, The TTM squeeze happens in a sideways market when Bollinger Bands squeeze inside the Keltner channels.

A long breakout will likely occur when Bollinger Bands expand outside the Keltner Channels and increase momentum with an Up trend in the market. 

Similarly, a short breakout will likely occur when Bollinger Bands expand outside the Keltner Channels and increase momentum with a Downtrend in the market. 

Using this methodology, we can go long when Bollinger Bands come out from Keltner channels and the momentum oscillator is above the zero line. Similarly, we can go short when Bollinger bands come out from Keltner channels and the momentum oscillator is below the zero line.

• The gray dots represent the period of low volatility when Bollinger Bands are inside the Keltner channels.
• The white dots represent the period of high volatility when Bollinger Bands are outside the Keltner channels.
  

Understanding the Bollinger Bands

It's one of the widely used indicators that helps with the technical analysis by Forex traders. John Bollinger developed the Bollinger Bands indicator in the 1980s. It comprises three lines in which the middle line is a 20 periods simple moving average.

The upper band is two standard deviations from the moving average, while the lower band is two standard deviations from the moving average.

Source: Bollinger Bands Trading Strategies.

Pro-Tips to Avoid the Head Fakes

• Remember that the indicator is heavily dependent on Bollinger on Bollinger bands and is therefore susceptible to fake breakouts or head fakes.
• Combining the price action, candlestick patterns, and support/resistance level with the BB Squeeze breakout is best to increase its success rate.
• It also comes with some other names like Squeeze Pro or Squeeze Momentum indicator MT5, which is essentially the name of the same indicator.