For gauging this he uses two common indicators - Bollinger Bands and Keltner Channels (ok, not so common!). He also uses the Momentum indicator to provide a trade bias as some as the Bollinger Bands come back outside the Keltner Channels. The Squeeze_Break indicator combines this into a signal indicator and has the following components:
- A positive green histogram
means that the Bollinger Bands are outside the Keltner Channels and the
market is lightly to be trending or volatile.The stronger the histogram
the stronger the directional price move.
- A negative red histogram
means that the Bollinger Bands are inside the Keltner Channels and the
market is lightly to be consolidating. The stronger the red histogram the
tighter price action is becoming.
- Incorporated into the
indicator is a Momentum indicator. According to the strategy J. Carter
goes long when the Bollinger Bands break outside the Keltner Bands and the
Momentum indicator is above the zero line. He goes short when the Momentum
indicator is below the zero line.
- I've also added other
indicator info in the top left hand corner to give a broader idea of
current market conditions.
- The indicator provides audio alerts when a potential breakout is occurring. This indicator tends to be better with the larger timeframes. Personally I don't trade purely on an alert signal alone. It's just a handy tool for warning me of changes in price action and potential breakouts.
