The TTM Squeeze is a technical indicator used by traders to identify potential breakout opportunities in the market. Developed by John Carter, the indicator combines elements of Bollinger Bands and the Keltner Channel to assess market volatility and momentum.
When the Bollinger Bands compress inside the Keltner Channels, it indicates a squeeze condition, suggesting that the market is in a period of low volatility and a potential breakout might be imminent. This compression signals that price is likely to begin a trend move, although the direction (up or down) requires further confirmation, often through additional technical analysis.
The TTM Squeeze is visualized on a chart with a series of dots and histogram bars. The dots typically change colors to indicate current conditions: when dots are red, it signals that the market is in a squeeze; a switch to green signifies the squeeze has released, hinting at a potential price movement. The histogram bars show momentum and help traders assess the strength and direction of a potential move, with rising bars suggesting positive momentum and falling bars indicating negative momentum.
Traders often use this indicator in conjunction with other tools and analysis, such as volume indicators or trend lines, to confirm breakout direction and enhance the reliability of their trading decisions.
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