Squeeze Momentum Indicator is a premium forex MT4 indicator downloaded from forexprofitway a derivative of ‘TTM Squeeze” by John Carter. It is a volatility indicator, discussed by John Carter in his “Mastering the Trade Book: chapter 11”.
Squeeze Momentum Indicator Overview
The most significant part of this indicator is the black cross. When black crosses the midline, it will indicate that the price is going to be squeezed. The low volatility and correction may provide an explosive move towards both upside and downside, known as “Squeeze release.”
Mr. Carter uses a momentum indicator beside the black cross to determine the market direction. If the momentum is above zero, it is a buy trend, and if the momentum is below zero, it is a sell trend. However, it is not mandatory to sue the momentum trading indicator as traders can use the oscillators to determine the market direction.
Elements of the Squeeze Momentum Indicator
The Squeeze momentum indicator has three elements, as mentioned below:
- Keltner Channel
- Bollinger bands
- Momentum Oscillator
When the market moves with low volatility, the Bollinger bands will become narrow and trade inside the Ketner Channel. Later on, these two elements can contract to get the energy before starting an explode.
How to Read the Squeeze Momentum Indicator?
The red and green lines, along with the zero lines, will indicate a market squeeze where the red dot will represent that the market squeeze is the effect. Moreover, the green dot means there is not squeezed in the price. When a green dot appears after some red dots, it will indicate that the squeeze is going to be fired.
On the other hand, the histogram in this trading indicator will provide the market momentum. The green histogram will represent a bullish momentum while the red histogram will represent the bearish momentum.
How to Trade Using the Squeeze Momentum Indicator?
We can use this indicator to enter the market for a trade or to know when to stay out of the market.
- Timeframe: This indicator works well in all timeframes from 1 hour to 1 week.
- Currency pair: it works well in all currency pairs.
The trading idea based on this indicator is when the squeeze happens, it will last for 8 to 10 candles. The stop loss should be below or above the candle from where the squeeze happens, and the take profit would be at 8 to 10th candle.
Let’s summarize the Squeeze Momentum Indicator:
- This indicator provides a trading opportunity when the price starts to move from a squeeze.
- The red and green lines, along with the zero lines, will indicate a market squeeze.
- This indicator also influences traders to get out of trading when the price is squeezing.