TTM Squeeze (Squeeze Momentum)

A volatility-compression detector — Bollinger Bands inside Keltner Channels — paired with a linear-regression momentum histogram; it flags coiling, not direction.

What it is

The TTM Squeeze, developed by John Carter (and widely known on TradingView through LazyBear's 'Squeeze Momentum' adaptation), is often treated as a black box of red and green dots. It is actually two ordinary, well-documented components bolted together. The first is a volatility-compression test: it checks whether the Bollinger Bands (a standard-deviation envelope) have contracted to fit entirely inside the Keltner Channels (an ATR envelope) around the same moving average. When they have, volatility is unusually low relative to its ATR baseline — the 'squeeze is on', shown as dots. The second component is a momentum histogram built from a linear regression of price's distance from a reference midline, which describes which way price has been leaning while volatility compresses and after it releases. The honest framing matters: periods of low volatility have historically tended to be followed by periods of higher volatility, so a squeeze describes conditions for a possible expansion — it says nothing about direction, and 'possible' is not a schedule. The indicator is descriptive, not predictive; this is educational material only, not financial advice, and trading involves risk of loss.

How it works

Both envelopes are centered on the same basis, typically a 20-period SMA of the close. The Bollinger Bands sit at basis ± 2.0 standard deviations of close over 20 bars; the Keltner Channels sit at basis ± 1.5 × ATR(20) (Carter's defaults — LazyBear's version exposes both multipliers). The squeeze condition is a direct comparison: squeeze on when the upper Bollinger Band is below the upper Keltner Channel and the lower Bollinger Band is above the lower Keltner Channel — i.e., the standard-deviation envelope fits inside the ATR envelope, meaning close-to-close dispersion is small relative to average true range. The squeeze 'fires' on the first bar where that stops being true. The momentum histogram is separate mathematics: take the midpoint of the highest high and lowest low over the length, average it with the SMA of close, subtract that reference from close, and run a linear regression (ta.linreg) over the same length on the result. The histogram's sign shows which side of the reference price has been on; growing bars describe strengthening displacement, shrinking bars describe fading displacement. Nothing in either component looks forward — both are computed entirely from past bars.

How traders read it

• Squeeze on (dots): Bollinger Bands are inside Keltner Channels — volatility is compressed relative to its ATR baseline. This is a market condition, not a trade signal.
• Squeeze fired: the first bar where the bands move back outside the channels marks the end of compression; the expansion that follows can be large, small, or a false start, and the squeeze itself never indicates which way.
• Histogram sign and slope: bars above zero describe price leaning above its recent reference, below zero the opposite; many users read the histogram's direction at the moment a squeeze fires as the momentum context — a description of recent bars, not a prediction.
• Growing vs shrinking bars: successive larger bars describe accelerating displacement; shrinking bars describe deceleration, which can precede either consolidation or reversal.
• Duration matters: long squeezes indicate extended compression, but there is no reliable mapping from squeeze length to the size or timing of any subsequent move.
• Read it with price structure and higher-timeframe context; a squeeze on one timeframe is often just noise inside a trend on another.

Common settings

Carter's defaults: length 20 for everything, Bollinger multiplier 2.0, Keltner multiplier 1.5, close as source. The Keltner multiplier sets the strictness of the squeeze test — 1.0 flags only extreme compression, 2.0 flags it frequently; some versions plot all three thresholds at once. Note that implementations differ: LazyBear's script offers True Range versus high-low range for the Keltner calculation, and different multiplier conventions across platforms mean 'the squeeze' can be on in one implementation and off in another on the same bar — worth checking before comparing results.

Strengths

• Fully decomposable: it is Bollinger Bands, Keltner Channels, and a linear regression — three standard tools whose math can be verified independently, so nothing about it needs to stay a black box.
• Makes 'the bands look tight' objective: the inside/outside test is a deterministic condition rather than a visual judgment.
• Grounded in a real statistical observation — volatility clustering — rather than a claimed price pattern.
• The two components separate concerns cleanly: the dots describe volatility state, the histogram describes directional lean, and neither is overloaded to do both.
• The condition is binary and timestamped, which makes it straightforward to study, alert on, and test without ambiguity.

Pitfalls to watch

• A squeeze has no direction: the compression test is symmetric — it says expansion is more likely than usual, never which way. Treating the dots as a directional signal misreads the mathematics.
• Expansion is not guaranteed or scheduled: squeezes can persist for a long time, fire into a small move, or fire and immediately re-compress; low volatility raises the odds of change, it does not promise a breakout.
• The histogram lags: linear regression over 20 bars of past data describes momentum that has already occurred, so the 'direction at fire' reading confirms late by construction.
• Settings sensitivity: the Keltner multiplier directly controls how often squeezes appear, and implementation differences (TR vs high-low range, multiplier conventions) mean different platforms disagree about when a squeeze exists.
• Whipsaw at the boundary: when the Bollinger and Keltner widths are nearly equal, the squeeze state can flicker on and off across consecutive bars, generating noisy transitions.
• No predictive power: both components summarize past volatility and past displacement; neither forecasts price, and no compression signal removes the risk of loss.

Pine v6 example

//@version=6
indicator("TTM Squeeze Example", overlay = false)

length = input.int(20, "Length", minval = 1)
bbMult = input.float(2.0, "Bollinger Multiplier", step = 0.1)
kcMult = input.float(1.5, "Keltner Multiplier", step = 0.1)

basis   = ta.sma(close, length)
dev     = bbMult * ta.stdev(close, length)
kcRange = kcMult * ta.atr(length)

bbUpper = basis + dev
bbLower = basis - dev
kcUpper = basis + kcRange
kcLower = basis - kcRange

// Squeeze on: Bollinger Bands fit inside Keltner Channels
squeezeOn = bbUpper < kcUpper and bbLower > kcLower

// Momentum: linear regression of close minus a midline reference
mid = math.avg(math.avg(ta.highest(high, length), ta.lowest(low, length)), ta.sma(close, length))
mom = ta.linreg(close - mid, length, 0)

plot(mom, "Momentum", style = plot.style_histogram, color = mom >= 0 ? color.teal : color.red)
plotshape(squeezeOn and barstate.isconfirmed, "Squeeze On", style = shape.circle, location = location.bottom, color = color.orange, size = size.tiny)
hline(0, "Zero", color = color.gray)

Pro tip: De-mystify the tool by plotting its parts: put Bollinger Bands and Keltner Channels directly on your price chart with the squeeze's settings and watch the moments the bands slip inside the channels — that is the entire 'squeeze', nothing more. Doing this once makes the two most common misreadings obvious: the dots carry no directional information, and the histogram at the moment of firing is a regression over the previous 20 bars, not a forecast. Use the squeeze as a description of volatility state, decide direction and risk from price itself, and expect a share of squeezes to fire into nothing. Educational only — no indicator predicts price, and trading involves risk of loss.

Educational only — not financial advice, not a recommendation to trade. No indicator is predictive; trading involves substantial risk of loss.