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Creator: John Carter
TTM Squeeze is a volatility and momentum indicator created using popular channel indicators Bolliner bands and Keltner channels.
Both Bollinger bands and Keltner channels are range channels developed using volatility measurement studies. But their calculations are different. Bollinger bands are created using standard deviation. Keltner channels are creating using ATR Average true range) indicator.
These two indicators are used to calculate the volatility squeeze.
When the Bollinger bands are within the Keltner channel bands, it is a low volatility period. It is a period of squeeze. The squeeze is on. When the Bollinger bands are outside of the Keltner bands, there is a volatility expansion. The squeeze is off during such periods. The squeeze goes on and off.
Donchian channel middle band is also calculated in this study and plotted as a histogram. It helps us identify momentum.
When the histogram is bullish, the momentum is bullish. When the histogram is bearish, the momentum is bearish. Rising histogram above zero line shows bullish direction. Falling histrogram below zero line shows bearish direction.
When the momentum bars are above zero line but starts falling, you can consider booking profits in the long positions. When the momentum bars below the zero line starts rising, you can consider booking profits in the short positions.
You will see the dots on the zero line of the indicator. When the dot is red, the squeeze is on. When the dot is green, the squeeze is off.
When the squeeze is on, wait for the momentum bars to indicate the direction.
Using three popular channel indicators, this indicator allows you to identify the trend, momentum, and squeeze in one study.
The indicator table value in TradePoint & RZone also provides you with a list of all values of this indicator for any group of stocks. This will allow you to compare the readings of this indicator across different stocks.
The indicator is applicable to all types of charting. Calculated based on the number of columns on P&F charts, bricks on Renko charts, lines on Line-break charts, candles on Heikin ashi charts, and lines on Kagi charts. While the formula and reading of the indicators remain the same, they become more dynamic on these charts.
This indicator is also available in the System Builder of RZone & TradePoint for all charting methods. Using the system builder, you can develop various strategies based on the different conditions already present in this indicator. Additionally, it can be used with other indicators or price patterns to develop effective trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.