TTM Squeeze Momentum Indicator

Parameters: bb_period = 20 (10–30) • bb_mult = 2 (1.5–2.5) • kc_period = 20 (10–30) • kc_mult = 1.5 (1–2) • momentum_period = 20 (10–30)

Overview

The TTM Squeeze operates on John Carter's observation that stocks "explode" for short periods and then consolidate 80% of the time. During consolidation phases, the market "gears up" for the next explosive move. The indicator detects these compression periods by monitoring when Bollinger Bands (20,2) squeeze inside Keltner Channels (20,1.5). When the bands are completely enclosed within the channels, it signals low volatility - the "squeeze." Red dots on the zero line indicate an active squeeze, while green dots show the squeeze has "fired," signaling that volatility is returning and a directional move is likely.

The momentum component uses a sophisticated calculation involving Donchian channel midlines and linear regression to smooth price action. This histogram provides directional bias with color-coded bars: light blue bars above zero indicate bullish momentum, dark red bars below zero suggest bearish momentum. The combination of squeeze detection and momentum analysis creates a comprehensive system that identifies both when to trade (squeeze firing) and which direction to trade (momentum direction), contributing to John Carter's remarkable 1,270% annualized return in 2020.

Interpretation & Trading Signals

Squeeze Status Signals:

  • Red Dots: Squeeze is ON - market consolidating, prepare for breakout
  • Green Dots: Squeeze OFF - volatility expanding, breakout occurring
  • First Green Dot: Primary entry signal after compression
  • Multiple Red Dots: Longer squeeze = stronger potential move

Momentum Direction:

  • Light Blue Bars: Rising momentum above zero - go long
  • Dark Red Bars: Falling momentum below zero - go short
  • Yellow/Red Above Zero: Bullish momentum weakening
  • Yellow/Blue Below Zero: Bearish momentum weakening

Trading Strategy:

  • Entry Timing: Buy first green dot with positive momentum
  • Direction Confirmation: Momentum histogram confirms trade direction
  • Exit Strategy: Close when momentum color changes
  • Multi-Timeframe: Works across all chart periods

Example Usage

Code examples will be available once the Rust implementation is complete.

Performance Analysis

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