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BBSqueeze Histogram
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BBSqueeze Histogram

  #1 (permalink)
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BBSqueeze Histogram

Curious if anyone can better explain to me what exactly the histogram of the BBSqueeze (aka TTM Squeeze) is displaying in its histogram and what the 0 line represents as well.

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  #2 (permalink)
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haonkered View Post
Curious if anyone can better explain to me what exactly the histogram of the BBSqueeze (aka TTM Squeeze) is displaying in its histogram and what the 0 line represents as well.

haonkered,

The BBSqueeze comes from TradeStation forum origin - not sure about how TTM Squeeze codes their histogram, but it seems to be very close.

For the BBSqueeze, the zero line represents the Donchian mid line. This midline is calculated by taking highest price - the lowest price of that last 20 bars (20 is default) and dividing that in half. Add to that the 20 period exponential average of the close divided in half. Then you get the 20 period linear regression of this value. That

The histogram is the delta of price from the midline.

I hope this helps!

blinker

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  #3 (permalink)
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TTM Squeeze


Technically, the Bollinger Band squeeze refers to a condition when the Bollinger Bands are running inside a Keltner Channel.

-> Bollinger Bands are constructed by adding/subtracting a multiple of the standard deviation to/from the midband

-> Keltner Channels are constructed by adding/subtracting a multiple of the average range to/from the midband


Detecting rangebound price action

The standard deviation takes into account the momentum over the lookback period, while the average range just takes into account the bar size. The squeeze is calculated as

2 * standard deviation calculated from the last 20 closes < 1.5 * average range (bar size) of the last 20 bars

The meaning is that momentum is comparatively small to intra-bar volatility. The indicator indentifies range bound price action.


Breakout or fake breakout

The squeeze comes to an end when momentum picks up. If you want to enter a breakout trade, you need an additional indicator (such as momentum) and a higher timeframe trend filter to determine the direction of the breakout.


Histogram

The histogram shows (half of) the difference between the width of the Bollinger Bands and the width of the Keltner Channel. A histogram below the zeroline denotes weak momentum or range bound price action. A histogram above the zeroline shows that the market is trending. However, the histogram cannot be used to determine whether the trend is up or down. The indicator is rather comparable to Wilder's ADX.



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  #4 (permalink)
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The Squeeze can be used in conjunction with trigger lines and higher time frames to determine the breakout direction.
Zero line crosses Can Be direction change. another time frame will be required to determine the direction.
Certain market have greater 'pull' on the direction of X market and can be used to see which direction it will head.
if you would like more info pm me and i will share more ...

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