TTM Squeeze Indicator: How to Trade

TTM Squeeze Indicator: Trading Method

The TTM Squeeze is a well-known tool in technical analysis, developed by John Carter of Trade the Markets. Its main purpose is to spot times of low volatility and predict potential price breakouts.

This indicator combines two widely used tools: Bollinger Bands and the Keltner Channel. Bollinger Bands are plotted around a moving average and expand or contract based on market volatility. The Keltner Channel uses the Average True Range (ATR) to determine the channel's range.

Understanding the TTM Squeeze:

The TTM Squeeze indicator has two main components:

  1. Red and Green Dots on the 0 Line: These dots show readings from Bollinger Bands and the Keltner Channel. Red dots mean low volatility (squeeze), while green dots indicate a potential breakout.
  2. The TTM Squeeze Histogram: This shows an asset's momentum - upward or downward. Rising lines above the 0-line suggest upward momentum, and bars below the 0-line suggest downward momentum.

When the red dots turn green, and the histogram shows upward momentum, it signals a potential long trade. If the red dots turn green, but the histogram indicates downward momentum, it suggests a possible short trade.

How Can You Use It?

The TTM Squeeze works on any time frame. Once the squeeze fires, it usually lasts for 8-10 bars:

  • On a 5-minute chart, it may last around 40 minutes.
  • On a 30-minute chart, it could be about 240 minutes.
  • On a daily chart, it may continue for 8-10 days.
  • On a weekly chart, it might span 8-10 weeks.
  • On a monthly chart, it could last 8-10 months.

Understanding these durations helps traders make more informed decisions in their trading strategies.

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