The TTM Squeeze is a technical analysis indicator used in trading to identify periods of low volatility and anticipates potential breakout trades. The TTM Squeeze is based on the Bollinger Bands indicator, which measures the volatility of a stock's price relative to its moving average.
The TTM Squeeze is composed of three parts: the Bollinger Bands, the Keltner Channels, and a momentum oscillator. The Bollinger Bands and Keltner Channels are plotted around the stock's price chart, and the momentum oscillator is plotted beneath the price chart. When the Bollinger Bands and Keltner Channels converge, this indicates low volatility and a potential breakout trade opportunity.
The momentum oscillator is used to confirm the trade signal. If the momentum oscillator is above the zero line, this indicates bullish momentum, and if it is below the zero line, this indicates bearish momentum. When the TTM Squeeze triggers a signal, traders can take a long position if the momentum oscillator is above the zero line or a short position if the oscillator is below the zero line.
It is important to note that like any technical indicator, the TTM Squeeze is not foolproof and should be used in conjunction with other analysis methods to make informed trading decisions. Traders should also consider market conditions, news events, and other factors that may impact the stock's price.