The Squeeze Momentum Indicator measures market volatility to identify breakouts. It uses Bollinger Bands and Keltner Channels. Comparing these two indicators' convergence and divergence reveals low volatility, signaling price breakouts. When the Keltner Channels contract within the Bollinger Bands, suggesting fewer price fluctuations, it signals a "squeeze" condition, like a coiled spring, where a rapid price movement may occur. Traders can use this signal to predict volatility and enter or alter transactions. This technical tool must be used with fundamental analysis and risk management for a complete trading strategy. Thus, the Squeeze Momentum Indicators help traders understand market dynamics during consolidation and predict price spikes.

Using Squeeze Momentum Indicator

A Squeeze Momentum Indicator may verify trade signals from other technical analysis tools. Positive values imply an upward price movement and growing momentum, while negative values suggest a downward price movement and decreasing momentum. Each bar in the TTM squeeze indicator histogram shows narrowing band tension. Higher Squeeze Momentum Indicator values indicate tighter bands, indicating a strong price change.

For best results during extreme market volatility, employ the Squeeze Momentum Indicator with other technical analysis tools like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD). Before trading with technical indicators, do your study. No indicator is perfect. Combining these indicators can help traders make better decisions and improve their trading techniques.

During strong volatility, the Squeeze Momentum may not work. Trading utilizing other indicators and analysis tools like RSI or MACD is advised. Remember that no technical signal is perfect and that traders should constantly research and analyze before trading.

Parameters of Squeeze Momentum Indicator

The Squeeze Momentum Indicators (SMI) allow investors to discover "squeeze" durations, low volatility intervals that commonly cause massive charge changes. Understanding SMI settings is critical for trading techniques using this indicator. Here are different squeeze momentum parameters:

Bollinger Bands Length

The indicator uses Bollinger Bands of length BB Length. A simple moving average and two standard deviations are shown above and below it from Bollinger Bands, a technical analysis tool. The moving average and standard deviation calculation durations in TTM squeeze indicator depend on the BB Length. Longer BB Lengths create smoother bands that may catch longer-term trends, while shorter ones make bands more responsive to short-term price changes.

Keltner Channel Length

KCLength is the indicator's Keltner Channel length. Keltner Channels are some other technical analysis approaches for rate traits and reversals. Unlike Bollinger Bands, which use fashionable deviations, Keltner Channels' breadth is determined via a median real variety (ATR) multiplier. The number of periods required to construct a price exponential moving average (EMA) and ATR multiplier depends on KCLength. A longer KCLength may smooth channels, whereas a shorter one may be more sensitive.

Keltner Channels Multiplier Factor

KCMultFactor is the Keltner Channels coefficient. Using this multiplication factor in TTM squeeze indicator, the Keltner Channel width is adjusted by the price movement average true range (ATR). A greater KCMultFactor widens the channels, capturing larger price swings, while a lower one narrows them, making them more sensitive to tiny price movements. Many traders experiment with multiplier factors to balance recording big price moves and filtering noise.

Bollinger Bands Multiplier Factor

Bollinger Bands employ the BBMultFactor coefficient. The BBMultFactor increases Bollinger Band width based on price standard deviation, like the KCMultFactor for Keltner Channels. The bands broaden with a higher BBMultFactor, indicating increased price volatility, and narrow with a lower one. Traders can alter this component to match Bollinger Bands to risk tolerance and trading preferences.

Squeeze Momentum Indicator settings can be customized to fit traders' trading methods and tastes. By changing parameter settings, traders can improve the indicator's ability to spot trading opportunities, market trends, and momentum shifts. However, customized parameters must be backtested to confirm they match past market behavior and monitored in real-time to make modifications.

How to Read Squeeze Momentum?

Interpreting market movements with the Squeeze Momentum Indicators requires understanding Bollinger Bands and Keltner Channels. How to read phases and signals:

Squeeze Phase

Bollinger Bands contracting within Keltner Channels suggests minimal volatility or squeeze. Contraction indicates market consolidation and minimal volatility usually precedes a big price move. At this point, the squeeze momentum indicator shows black dots around zero.

Release Phase

Bollinger Bands outside the Keltner Channels show volatility and a probable breakout, starting the release phase. This expansion might cause strong price changes, offering attractive trading opportunities.

The zero-axis indicator produces gray dots when the market decompresses. The initial price movement after the squeeze period frequently indicates the breakout direction. By understanding these two phases of momentum indicators, traders can make better selections, placing trades during the build-up and profiting from the price spike. This strategy improves risk management by finding clearer entry and exit locations and increasing trade success.

Benefits of Squeeze Momentum Return Values

Clear Volatility Shift Signals

The Squeeze Momentum Indicator (SMI) shows low-to-high volatility swings, which can precede market breakouts. Clear signals of low-to-high volatility help traders predict market breakouts and position themselves for favorable chances.

A Dual-Indicator System

Bollinger Bands and Keltner Channels give the TTM squeeze indicator a comprehensive market movement and volatility perspective. The SMI integrates these two prominent technical analysis methods to give traders broad market dynamics information, enabling educated decision-making and knowledge of market behavior.

Major Move Anticipation

SMI accurately predicts major price changes after consolidation. Traders can prepare for breakouts and breakdowns by detecting squeeze periods when volatility contracts before growing again. This prediction helps traders capitalize on major market changes, making the SMI a vital tool for confidently navigating turbulent market situations.

Squeeze Momentum Return Values

The Squeeze Momentum Indicator Histogram graphic's alternating red and green bars show market momentum. The squeeze Momentum Plus Signal shows the color of the "+" symbol at 0 on the graph, which varies according to the trading platform. Traderlands displays + sign colors as follows:

• Black +: 1
• Blue +: -1
• Gray +: 0

Return values should be 1.0 or -1 in the rule group when using the Squeeze Momentum Plus Signal. Example: A rule group with the condition Squeeze Momentum Plus Signal < 3 will always be true. To achieve proper research and trading strategy decisions, traders must be cautious and thoroughly read the Squeeze Momentum Indicators Plus Signal.