Squeeze Break MT4 Indicator: Oscillator on Bollinger Bands and Keltner Channel

The Squeeze Break MT4 Indicator is a powerful trading tool that helps traders identify potential entry points into the market by analyzing the relationship between periods of low and high volatility. Developed based on John Carter’s strategy presented in his book “Mastering the Trade,” the Squeeze Break indicator combines the Bollinger Band and Keltner Channel indicators to offer invaluable insights into market dynamics. In this article, we will explore how to use the Squeeze Break indicator effectively in trading and discuss its various features and benefits.

Understanding the Squeeze Break MT4 Indicator

The main concept behind the Squeeze Break indicator is that markets tend to transition between periods of low volatility (consolidation) to periods of high volatility (trending), and vice versa. By tracking these shifts, traders can capitalize on potential breakouts and directional price movements.

The Squeeze Break indicator employs the Bollinger Bands and Keltner Channel readings to determine market volatility. Additionally, the Momentum indicator is used to guide traders in opening and closing positions. The indicator generates a histogram that reflects the relationship between the Bollinger Bands and Keltner Channel:

Positive green histogram: Indicates that the Bollinger Bands are outside the Keltner Channel, suggesting a trending or volatile market. The stronger the green histogram, the more pronounced the directional price movement.
Negative red histogram: Indicates that the Bollinger Bands are within the Keltner Channel, implying a consolidating market. The stronger the red histogram, the smaller the price movement.

Using the Squeeze Break Indicator in Trading

The Squeeze Break indicator can be employed in various trading strategies to identify potential market entry points. Here are some key tips on using the indicator effectively:

Identify Breakout Opportunities: According to Carter’s strategy, long positions should be entered when the Bollinger Bands break out of the Keltner Channel and the Momentum is above the zero line. Conversely, short positions should be opened when the Momentum indicator goes below zero.
Monitor the Histogram: Keep an eye on the Squeeze Break histogram to assess the strength of the directional price movement or the consolidation phase. This can help traders gauge the potential for a breakout and prepare for possible market entry points.
Utilize Higher Timeframes: The Squeeze Break indicator tends to generate more accurate signals on higher timeframes. Traders should consider using the indicator on longer timeframes to improve the reliability of the signals.
Combine with Other Indicators: The Squeeze Break indicator can be used in conjunction with other technical MT4 indicators to confirm potential trade setups and enhance overall trading strategy. For example, traders may consider using moving averages, RSI, or chart patterns to validate the signals generated by the Squeeze Break indicator.
Watch for Alert Signals: The indicator beeps when a potential breakout is approaching, alerting traders to potential market entry opportunities.

Conclusion

The Squeeze Break MT4 Indicator offers traders a powerful tool for identifying potential market entry points based on the combination of Bollinger Band and Keltner Channel indicators. By monitoring the relationship between these indicators, traders can capitalize on periods of increased market volatility and enhance their trading strategies.

By understanding the various features and benefits of the Squeeze Break indicator, traders can effectively utilize this tool to improve their market analysis and increase the likelihood of successful trades. In addition, combining the Squeeze Break indicator with other technical indicators and higher timeframes can further refine trading strategies and optimize overall trading performance.

Features of Squeeze Break MT4 indicator