Squeeze Momentum Indicator with Bollinger Bands and Range Envelopes

Summary

This indicator compares Bollinger Bands with a second price envelope built from average range. When the Bollinger Bands fit inside the range envelope, the indicator marks a squeeze by leaving the squeeze series undefined. When the Bollinger Bands extend outside that envelope, it displays a squeeze value alongside a momentum measure. The momentum series is based on a linear regression of price relative to a reference derived from recent highs, lows, and average price. The example gives default parameter settings and describes the output as a histogram with a momentum line.

The author suggests the indicator works well on forex pairs, but provides no tests, markets, timeframes, or performance evidence to support that claim. The document does not give a complete entry, exit, or risk-management strategy. A squeeze identifies a volatility state; by itself, the described calculation does not establish the direction or reliability of a subsequent move. Implementation choices and platform behavior may also affect signals.

Key ideas

• The indicator compares Bollinger Bands with an envelope based on average range.
• A squeeze is marked when the Bollinger Bands lie inside the range envelope.
• A linear-regression calculation supplies the momentum series displayed with the squeeze state.
• The document offers default parameters and mentions forex use, without supporting results.
• The indicator describes volatility and momentum conditions but does not specify a complete trading strategy.

Tags

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