Bollinger Bands Squeeze

📈 Bollinger Bands Squeeze

This indicator enhances traditional Bollinger Bands by integrating Keltner Channel layers to visualize market compression and volatility expansion — allowing traders to easily identify when a squeeze is building or releasing.

🔍 Overview

This is a refined version of the classic Bollinger Bands, designed to detect volatility squeezes using multiple Keltner Channel thresholds.

The script plots standard Bollinger Bands and dynamically colors the bands according to the degree of compression relative to the Keltner Channels.

⚙️ How It Works

Bollinger Bands are calculated from a selected moving average (SMA, EMA, SMMA, WMA, or VWMA) and standard deviation multiplier.

Keltner Channels are derived from ATR (True Range) using three sensitivity levels (1.0, 1.5, and 2.0× multipliers).

When Bollinger Bands contract inside a Keltner Channel, the script marks a squeeze state:

🟠 High Compression (Orange): Very tight volatility — expect breakout soon.

🔴 Mid Compression (Red): Moderate contraction — volatility is building.

⚫ Low Compression (Gray/Black): Early compression phase.

🧩 Inputs & Customization

Length: Period for both Bollinger and Keltner calculations.

Basis MA Type: Choose from SMA, EMA, SMMA (RMA), WMA, or VWMA.

StdDev Multiplier: Controls Bollinger Bandwidth.

Keltner Multipliers (1.0 / 1.5 / 2.0): Adjust compression thresholds.

Offset: Shifts the bands visually on the chart.

🕹️ Best Use Cases

Identify pre-breakout conditions before volatility expansion.

Combine with volume, momentum, or trend indicators (e.g., RSI) for confirmation.

Ideal for scalping, breakout trading, or volatility-based entries during session opens.