Understanding the TTM Squeeze Indicator

Learn to identify explosive momentum opportunities using the TTM Squeeze pattern analysis.

What is the TTM Squeeze?

The TTM Squeeze is a volatility-based indicator that identifies periods when a stock's price is "coiling" for a potential explosive move. Created by John Carter, it combines Bollinger Bands and Keltner Channels to spot moments of extreme low volatility.

The Concept:

When volatility contracts to extremely low levels, it often precedes periods of high volatility. It's like a spring being compressed - the tighter it gets, the more explosive the eventual release.

"The calm before the storm" - Low volatility periods are followed by high volatility moves.

How the Squeeze Works

Technical Components:

Bollinger Bands (20, 2)

  • • Based on standard deviation
  • • Measure statistical volatility
  • • Contract during low volatility

Keltner Channels (20, 1.5)

  • • Based on Average True Range
  • • Measure actual price movement
  • • More responsive to price action

Squeeze Condition:

A squeeze occurs when Bollinger Bands contract inside the Keltner Channels. This indicates that volatility has reached extremely low levels and an explosive move is likely coming.

Squeeze Signal Rankings

RANK 1

EXTREME SQUEEZE

The tightest compression - highest probability of explosive move. These are rare and highly valuable signals.

Trading Action: Prepare for major breakout. Set alerts and watch closely.
RANK 2

HIGH SQUEEZE

Strong compression with high probability of significant move. Excellent trading opportunities.

Trading Action: Prime candidate for breakout trading. Plan your entry strategy.
RANK 3

MEDIUM SQUEEZE

Moderate compression. Good potential but requires more careful analysis of other factors.

Trading Action: Monitor closely. Confirm with volume and trend analysis.
RANK 4

LOW SQUEEZE

Mild compression. Lower probability but still worth monitoring for confluence with other signals.

Trading Action: Secondary signal. Use for confirmation of other patterns.
RANK 5

NO SQUEEZE

Normal volatility conditions. No compression present.

Trading Action: Focus on other technical patterns and setups.

Trading the Squeeze Breakout

Step-by-Step Strategy:

1

Identify the Squeeze

Find stocks with squeeze rankings 1-3 for the best opportunities.

2

Wait for the "Fire"

The squeeze "fires" when Bollinger Bands expand outside Keltner Channels.

3

Determine Direction

Use momentum indicators or price action to determine breakout direction.

4

Enter on Confirmation

Enter when price breaks significantly with increased volume.

Combining Squeeze with Box Patterns

Powerful Combination Strategy:

When a stock shows both a box pattern and a TTM squeeze, you have a high-probability setup with two independent confirming signals.

Box Pattern Provides:

  • • Clear entry level (breakout)
  • • Defined stop loss (box low)
  • • Price target (measured move)

Squeeze Adds:

  • • Momentum confirmation
  • • Volatility expansion signal
  • • Higher probability of follow-through