Description:
The BB/KC Squeeze is a valuable technical analysis tool for traders seeking to capitalize on breakout opportunities in tight trading ranges. This indicator combines the volatility and momentum components of Bollinger Bands and Keltner Channels to help traders predict when a price might break out of its current range. The BB/KC Squeeze Indicator combines Bollinger Bands (BB) and Keltner Channels (KC) to identify periods of low volatility leading to potential breakouts. The indicator signals a "squeeze" when the Bollinger Bands contract within the Keltner Channels, suggesting decreased volatility and a potential impending breakout. When the Bollinger Bands expand back outside the Keltner Channels, it signals that volatility is returning, and a new trend may be starting.
Input Parameters:
- Length: Number of periods used in the calculation.
- BB.Mult: Standard deviation of the Bollinger Bands.
- K.Mult: Standard deviation of the Kelter Channel.
- K.ATR: Average True Range of the Kelter Channel.
Use Cases:
- Finding a ‘squeeze’ within the indicator. A squeeze occurs when the Bollinger Bands are within the Kelter Channel. The zero line contains both red and green dots. The red dot is seen when the price is squeezing (The Bollinger Bands are inside the Keltner Channels), and a green dot is seen when the squeeze is firing (the Bollinger Bands are outside the Keltner Channels).
- Helps identify low volatility, which then sometimes precedes big price movements.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our Learning Center Article.