Keltner/Bollinger Squeeze For ThinkOrSwim

[Thonex]

To use the Keltner/Bollinger Squeeze indicator in day trading, look for situations where the Bollinger Bands contract and fall completely within the Keltner Channels, signifying a period of low volatility; when the bands then expand beyond the Keltner Channels, it indicates a potential breakout and is considered a "squeeze firing," prompting you to enter a trade based on the direction of the price movement following the breakout.

Key points to remember:

• Identifying a Squeeze:
  When the Bollinger Bands are completely contained within the Keltner Channels, a squeeze is occurring, showing low volatility and potential for a significant price move soon.
  
  
• Breakout Signal:
  When the Bollinger Bands expand beyond the Keltner Channels, it signals a potential breakout, and you should consider entering a trade in the direction of the price movement.
  
  
• Confirmation with Price Action:
  Don't solely rely on the squeeze indicator; use price action and other technical indicators to confirm the breakout direction and potential trade entry points.
  

How to trade with a Keltner/Bollinger Squeeze:

• Buy Signal:
  If the price breaks above the upper Bollinger Band after a squeeze, consider entering a long position.
  
  
• Sell Signal:
  If the price breaks below the lower Bollinger Band after a squeeze, consider entering a short position.
  
  
• Stop Loss Placement:
  Place your stop-loss order on the opposite side of the breakout level, outside the recent consolidation range.

Important considerations:

• Timeframe Selection:
  Choose a timeframe that aligns with your trading style, but generally, shorter timeframes are preferred for day trading.
  
  
• False Signals:
  Squeeze indicators can sometimes generate false signals, so it's crucial to use other technical analysis tools for confirmation.
  
  
• Market Conditions:
  The Keltner/Bollinger Squeeze is most effective in volatile markets where price consolidation periods are followed by sharp breakouts.

I concatenated a script for using the Keltner channel and Bolli bands to illustrate squeezes without adding more colored lines/chaos to a chart. The blue-greenish cloud manifests when the upper & lower ranges of the Keltner channel move outside the Bollinger band's range. I find it easier on the eyes. Anyway... It's my first post here so I thought I'd contribute something... and I'm sure I'll be asking many questions on other forums because I haven't coded a thing since before the pandemic.

Here's the code -- Enjoy:

#
# Combined Keltner and Bolli by AK
#

#============ Bolli Bands ====================
input Show_Bolli = 1;
input price = close;
input displace = 0;
input Bolli_length = 20;
input Num_Dev_Dn = -2.0;
input Num_Dev_up = 2.0;
input averageType = AverageType.Simple;

def sDev = stdev(data = price[-displace], length = Bolli_length);

def MidLine = MovingAverage(averageType, data = price[-displace], length = Bolli_length);
def Bolli_LowerBand = MidLine + num_Dev_Dn * sDev;
def Bolli_UpperBand = MidLine + num_Dev_Up * sDev;


AddCloud(Bolli_LowerBand, Bolli_UpperBand, color.gray, color.gray,no);
#============ End of Bolli Bands ====================

#============= Kelnter Channels ===============
#
# TD Ameritrade IP Company, Inc. (c) 2007-2017
#

declare weak_volume_dependency;

input Kelt_displace = 0;
input Kelt_factor = 1.5;
input Kelt_length = 20;
input Kelt_price = close;
input Kelt_averageType =averageType.SIMPLE;
input Kelt_trueRangeKelt_averageType = averageType.SIMPLE;

def shift = Kelt_factor * MovingAverage(Kelt_trueRangeKelt_averageType, TrueRange(high, close, low), Kelt_length);

def average = MovingAverage(Kelt_averageType, Kelt_price, Kelt_length);

def Avg = average[-Kelt_displace];
#Avg.SetDefaultColor(GetColor(1));

def Kelt_Upper_Band = average[-Kelt_displace] + shift[-Kelt_displace];
#Kelt_Upper_Band.SetDefaultColor(GetColor(8));

def Kelt_Lower_Band = average[-Kelt_displace] - shift[-Kelt_displace];
#Kelt_Lower_Band.SetDefaultColor(GetColor(5));

#============= End of Kelnter Channels ===============

def Bolli_inside_Kelner = if Bolli_UpperBand < Kelt_Upper_Band and Bolli_LowerBand > Kelt_Lower_Band then 1 else 0;

def Color_BG = if Bolli_inside_Kelner == 1 then Double.POSITIVE_INFINITY else Double.NEGATIVE_INFINITY;  

#addcloud(Color_BG, - Color_BG, Color.light_gray,color.black);
addcloud(if Bolli_inside_Kelner then Kelt_Lower_Band else double.NaN, if Bolli_inside_Kelner then Kelt_Upper_Band else double.Nan, Color.gray,color.cyan);

 

[rad14733]

@Thonex How would you say this compares to the various other TTM_Squeeze related indicators here in the forums...???