Squeeze Light: Detecting Volatility Compression with Bollinger and Keltner Bands

Summary

Squeeze Light is an indicator that signals volatility compression when Bollinger Bands fit inside Keltner Bands. It plots separate on and off states as a histogram, treating the compressed state as a pause that may precede an expansion in volatility. The calculation compares a Bollinger-based measure of close-price dispersion with a Keltner-based measure derived from average true range. Band periods and scaling factors are configurable, and the included ProBuilder implementation is described as a conversion of an earlier MQL4 version.

The signal identifies a market condition rather than predicting the direction or timing of a breakout. The document provides no backtest or outcome data, and it does not specify a trading entry, exit, or risk-management method. Users would need to assess the indicator across instruments and settings and pair it with a directional or trade-management approach before treating it as a strategy.

Key ideas

• The indicator marks compression when Bollinger Bands are inside Keltner Bands.
• Its histogram distinguishes squeeze-on and squeeze-off states.
• The calculation compares close-price standard deviation with an average-true-range measure.
• Band periods and scaling factors can be adjusted.
• Compression may precede greater volatility, but the indicator does not identify breakout direction or timing.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.