The TTM Squeeze identifies volatility compression by comparing two envelopes: Bollinger Bands (which track standard deviation) and Keltner Channels (which track ATR). When the Bollinger Bands contract inside the Keltner Channels, volatility has compressed to an extreme — the “squeeze is on” — which often precedes an explosive move.
How the squeeze works
Bollinger Bands narrow when volatility drops. When they narrow enough to fit within the Keltner Channels, the market is unusually quiet — coiled. This compression is unstable; energy builds and eventually releases in an expansion move. The indicator typically shows “squeeze on” dots and fires a “squeeze fired” signal when the bands push back outside the channels — the release beginning. A momentum histogram usually accompanies it to hint at direction.
How to trade the release
The squeeze tells you a move is coming, not which way — so pair it with direction. When the squeeze fires, trade the expansion in the direction of the momentum histogram and price structure (a breakout of the coil). It's the mechanical version of the chop-to-trend transition and the inside-bar coil: compression, then a directional release.
The squeeze marks the coil; it doesn't pick the direction. When it fires, trade the release the way price and momentum point.
The limits
The squeeze signals timing, not direction — and releases can fake out (fire, then reverse), so it's context, not a standalone trigger. It's strongest combined with a level and the regime: a squeeze firing as price breaks a wall in a trending regime is a high-conviction expansion. Use it to anticipate a move and to size for the coming volatility, then confirm direction with structure.