Theory:
The "squeeze" method is closely tied to the Bollinger Bands indicator, as it utilizes standard deviations in its calculations. Essentially, this method merges the dynamics of Bollinger Bands with the squeeze concept into a single powerful indicator. You can find the original code for this indicator here.
Usage:
First off, keep an eye on the middle Bollinger Band. If it lacks color (appearing neutral), this suggests that the market is consolidating, hinting at a potential breakout in either direction. Use the Bollinger Bands themselves to gauge the likely direction of the breakout, and then look for a color change in the middle line as your trading signal. It's important to note that the color of this line is determined not by its slope but by the median price's position relative to it.
The default ATR and deviation band multipliers are commonly used settings, but I recommend experimenting with these parameters to tailor the indicator to your trading style before making any decisions.
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