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Bollinger Bands Squeeze - indicator for MetaTrader 5

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Bollinger Bands Squeeze - The Calm Before the Storm

The Bollinger Bands Squeeze is one of the most powerful and sought-after signals when using the Bollinger Bands indicator. It signals a period of low market volatility that is about to end, foreshadowing a significant price move.


1. What are Bollinger Bands?

  • A technical analysis indicator consisting of three lines:

    • Middle Band: A 20-period Simple Moving Average (SMA).

    • Upper Band: Middle Band + (2 x Standard Deviation).

    • Lower Band: Middle Band - (2 x Standard Deviation).

  • The upper and lower bands expand and contract based on market volatility.

2. When Does the "Squeeze" Happen?

A Bollinger Bands Squeeze occurs when the upper and lower bands contract and move closer together. This indicates:

  • The market is in a "consolidation" or quiet phase.

  • Price volatility is extremely low.

  • Buying and selling pressure is in equilibrium.

Visually, the bands coiling tightly resembles a squeeze, compressing the market's energy and tension.

3. The Meaning: It Forecasts a Major Move

"The tighter the squeeze, the bigger the move." When the bands begin to expand again after a squeeze, it is a clear signal that:

  • The consolidation phase is over.

  • A new, strong trend is about to begin.

  • The price will "break out" of the trading range with high momentum.

Crucial Note:

  • The Squeeze only warns of an imminent volatile move; it does not predict the direction.

  • The breakout direction (up or down) must be confirmed using:

    • A sharp increase in trading volume.

    • Other technical signals (candlestick patterns, RSI, etc.).

In summary, the Bollinger Bands Squeeze is an excellent tool for identifying when the market is "quiet before the storm." When you spot a squeeze, traders should prepare for a substantial price movement.


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