This indicator is designed for trading the strategy first mentioned in the book “Mastering the Trade” written by John Carter. The strategy is based on the changing volatility of any market. In both the Forex and stock markets, stages of trends alternate with stages of flatness. And in order to make money, you need to buy at the beginning of a bullish trend, sell at the beginning of a bearish trend, and hold your position until the trend persists. The Squeeze Break indicator for Metatrader 4 will help you do this. It is displayed in a window below the price chart and consists of a red-green histogram and a blue oscillator line.

The histogram shows the presence of a trend.

If there is a trend in the market, the histogram is green, if there is no trend, the histogram is red. The larger the bars in the histogram, the stronger the trend.

The blue line shows the direction of the trend. If the blue line is below zero, the trend is bearish. If the blue line is above zero, the trend is bullish.

How Is Indicator Calculated?

To show the logic behind the Squeeze Break indicator, we added the Bollinger Bands (green lines on the price chart) and the Keltner Channel (red lines on the price chart).

The point is that Bollinger Bands and Keltner Channel react with different sensitivity to increased volatility, which is typical for trends.

When the Bollinger Bands are inside the Keltner channel – the red color of the histogram indicates that there is no trend.

Accordingly, when the Bollinger Bands expand beyond the Keltner channel – the histogram signals the beginning of a trend. The greater the distance between the Bollinger Bands and the Keltner channel lines – the larger the bars on the histogram.

The blue line indicating the trend direction is nothing else but a classic Momentum technical indicator.

Buy Signals

When the histogram bar changes color to green and the blue line is above zero and pointing upward, this is a buy signal.

Hold your position as long as the trend is valid, and the blue line is above zero. In many cases, though, you might not wait until this point and realize that momentum is over. And if you decide to close the position when the histogram and the blue line make highs, it will be a reasonable action to keep your profits.

Sell Signals

When the histogram changes color to green and the blue line is below zero, this is a sell signal. Hold the position as long as the blue line is below zero and the histogram is green. It is not forbidden to close the position when signs of trend weakening are received.

Conclusion

The Squeeze Break indicator for Metatrader 4 helps you trade in a trend, indicating the beginning and end of a trend, as well as its direction – bullish or bearish. It doesn’t repaint.

It allows you to:

• find trends fully automatically;
• change settings of 3 classic indicators that are built into Squeeze Break indicator;
• customize the display of additional information;
• set up notifications;
• analyze signals on history.

Be aware, the Squeeze Break indicator for Metatrader does not guarantee the best buy and sell signals ever. It tends to lag and send false signals sometimes. However, you can effectively increase the accuracy of the signals, for example, if you:

• consider combining indicator signals with other technical analysis tools;
• combine signals on daily chart with signals on intraday chart;
• focus on sell signals near resistance zones and buy signals near support zones.

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