bbsqueeze_dark[1]
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This script functions as a technical analysis tool designed to help traders identify momentum shifts and market "squeezes"—periods where price action becomes abnormally compressed before a potential breakout. It achieves this by combining three distinct mathematical concepts: linear regression, standard deviation, and average true range.
Momentum Tracking
The core of the logic relies on a custom linear regression calculation. Rather than simply looking at the current price, the script analyzes the relationship between the price action and its historical averages over a specific window of time. It calculates a "slope" to determine the strength and direction of the market trend.
By comparing the current slope to the previous one, the script distinguishes between:
- Accelerating Trends: When the momentum is increasing in a specific direction.
- Decelerating Trends: When the momentum is beginning to weaken or "curve" back.
Visually, this is represented through different histogram styles that highlight whether the current move is gaining strength or losing steam.
Volatility and "The Squeeze"
While the histograms show the direction of the trend, the script also performs a secondary analysis to measure volatility. It looks at the relationship between two key metrics:
- Standard Deviation: This measures how much the price is fluctuating away from its average.
- Average True Range (ATR): This measures the actual "size" of the candles or price movements.
By comparing these two values, the script calculates a "Squeeze" factor. When market volatility becomes abnormally low relative to historical norms, it indicates a "squeeze"—a state where the market is coiling like a spring.
Visual Signals
The logic culminates in the placement of visual markers (arrows) on the chart. These signals are triggered specifically when the calculated "Squeeze" value crosses a specific threshold.
- If the volatility remains within normal parameters, no signal is shown.
- When the market reaches a state of extreme compression, the script provides a visual cue to alert the trader that a breakout in one direction or another may be imminent.
In summary, this tool allows a trader to see two things simultaneously: where the price is currently headed (via momentum histograms) and when the market is becoming too tight (via squeeze signals), helping to identify high-probability entry points where explosive movement often follows periods of quiet consolidation.
//+------------------------------------------------------------------+
//| bbsqueeze.mq4 |
//| Copyright © 2005, Nick Bilak, beluck[AT]gmail.com |
//| enhanced a little bit by CJ Rivas, carlos[AT]vealo.com |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2005, Nick Bilak"
#property link "http://metatrader.50webs.com/"
#property indicator_separate_window
#property indicator_buffers 6
#property indicator_color1 Blue
#property indicator_color2 Red
#property indicator_color3 DarkBlue
#property indicator_color4 Maroon
#property indicator_color5 Red
#property indicator_color6 Lime
//---- input parameters
extern int bolPrd=20;
extern double bolDev=2.0;
extern int keltPrd=20;
extern double keltFactor=1.5;
extern int momPrd=12;
//---- buffers
double upB[];
double upB2[];
double loB[];
double loB2[];
double upK[];
double loK[];
int i,j,slippage=3;
double breakpoint=0.0;
double ema=0.0;
int peakf=0;
int peaks=0;
int valleyf=0;
int valleys=0, limit=0;
double ccis[61],ccif[61];
double delta=0;
double ugol=0;
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
//---- indicators
SetIndexStyle(0,DRAW_HISTOGRAM,EMPTY,3);
SetIndexBuffer(0,upB);
SetIndexEmptyValue(0,EMPTY_VALUE);
SetIndexStyle(1,DRAW_HISTOGRAM,EMPTY,3);
SetIndexBuffer(1,loB);
SetIndexEmptyValue(1,EMPTY_VALUE);
SetIndexStyle(4,DRAW_ARROW,EMPTY,2);
SetIndexBuffer(4,upK);
SetIndexEmptyValue(4,EMPTY_VALUE);
SetIndexArrow(4,159);
SetIndexStyle(5,DRAW_ARROW,EMPTY,2);
SetIndexBuffer(5,loK);
SetIndexEmptyValue(5,EMPTY_VALUE);
SetIndexArrow(5,159);
SetIndexStyle(2,DRAW_HISTOGRAM,EMPTY,3);
SetIndexEmptyValue(2,EMPTY_VALUE);
SetIndexBuffer(2,upB2);
SetIndexStyle(3,DRAW_HISTOGRAM,EMPTY,3);
SetIndexEmptyValue(3,EMPTY_VALUE);
SetIndexBuffer(3,loB2);
//----
return(0);
}
//+------------------------------------------------------------------+
//| Custor indicator deinitialization function |
//+------------------------------------------------------------------+
int deinit()
{
//----
//----
return(0);
}
//+------------------------------------------------------------------+
//| Custom indicator iteration function |
//+------------------------------------------------------------------+
int start()
{
int counted_bars=IndicatorCounted();
int shift,limit;
double diff,d,dPrev, std,bbs;
if (counted_bars<0) return(-1);
if (counted_bars>0) counted_bars--;
limit=Bars-31;
if(counted_bars>=31) limit=Bars-counted_bars-1;
for (shift=limit;shift>=0;shift--) {
//d=iMomentum(NULL,0,momPrd,PRICE_CLOSE,shift);
d=LinearRegressionValue(bolPrd,shift);
dPrev=LinearRegressionValue(bolPrd,shift+1);
if(d>0) {
if ((dPrev>0) && (dPrev > d)){ upB2[shift]=d; upB[shift] = 0; } else { upB[shift]= d; upB2[shift] = 0; }
//upB[shift]=0;
loB[shift]=0;
loB2[shift]=0;
} else {
if ((dPrev<0) && (dPrev < d)){ loB2[shift]=d; loB[shift] = 0; } else { loB[shift]= d; loB2[shift] = 0; }
upB[shift]=0;
upB2[shift]=0;
//loB[shift]=d;
}
diff = iATR(NULL,0,keltPrd,shift)*keltFactor;
std = iStdDev(NULL,0,bolPrd,MODE_SMA,0,PRICE_CLOSE,shift);
bbs = bolDev * std / diff;
if(bbs<1) {
upK[shift]=0;
loK[shift]=EMPTY_VALUE;
} else {
loK[shift]=0;
upK[shift]=EMPTY_VALUE;
}
}
return(0);
}
//+------------------------------------------------------------------+
double LinearRegressionValue(int Len,int shift) {
double SumBars = 0;
double SumSqrBars = 0;
double SumY = 0;
double Sum1 = 0;
double Sum2 = 0;
double Slope = 0;
SumBars = Len * (Len-1) * 0.5;
SumSqrBars = (Len - 1) * Len * (2 * Len - 1)/6;
for (int x=0; x<=Len-1;x++) {
double HH = Low[x+shift];
double LL = High[x+shift];
for (int y=x; y<=(x+Len)-1; y++) {
HH = MathMax(HH, High[y+shift]);
LL = MathMin(LL, Low[y+shift]);
}
Sum1 += x* (Close[x+shift]-((HH+LL)/2 + iMA(NULL,0,Len,0,MODE_EMA,PRICE_CLOSE,x+shift))/2);
SumY += (Close[x+shift]-((HH+LL)/2 + iMA(NULL,0,Len,0,MODE_EMA,PRICE_CLOSE,x+shift))/2);
}
Sum2 = SumBars * SumY;
double Num1 = Len * Sum1 - Sum2;
double Num2 = SumBars * SumBars-Len * SumSqrBars;
if (Num2 != 0.0) {
Slope = Num1/Num2;
} else {
Slope = 0;
}
double Intercept = (SumY - Slope*SumBars) /Len;
double LinearRegValue = Intercept+Slope * (Len - 1);
return (LinearRegValue);
}
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