45 Squeeze

Also known as John Carter’s “TTM Squeeze”. The relationship between two studies: Bollinger Bands® and Keltner’s Channels. When the volatility increases, so does the distance between the bands, conversely, when the volatility declines, the distance also decreases. It finds sections of the Bollinger Bands which fall inside the Keltner’s Channels. When the Bollinger Bands go inside of the Keltner Channel, the market is said to be in a squeeze.

The final component of the TTM Squeeze indicator is a momentum indicator. Once the Bollinger Bands move outside of the Keltner Channel, a squeeze has “fired”. In order to determine the direction of the move, we then look to the momentum. If it is above zero, the squeeze has fired long. Inversely, a short squeeze would be signified by negative momentum.

Figure 8.60: Squeeze

A version of the indicator is to calculate the amount of price the KC is outside the BB, as in the figure below.

Figure 8.61: Lazy bearSqueeze