Consolidation - Squeeze Indicator

LizardIndicators’ Squeeze Indicator:

The Squeeze indicator identifies one of the following scenarios:

• Low volatility squeeze: Occurs when the standard deviation reaches a period of low volatility, compared to the 120 bar lookback period.
• Consolidation squeeze: Occurs when the Bollinger Bands narrow in width, moving inside the Keltner channels (range bound market).
• Full squeeze: Occurs when both of the above scenarios apply at the same time, i.e. low volatility as indicated by standard deviation for the lookback period, and low true range volatility.

For the Bollinger Squeeze, we want low volatility (but not minimum) when compared to the 120 bar lookback period. By default, the threshold is set to 1.2. By increasing this value, the low volatility definition will become more stringent, effectively delivering fewer low volatility setups.

All of the above squeeze indicator breakouts must be aligned by two momentum periods, 10 and 25 bars. Also, in order to eliminate distortions from the lookback period (and reduce noise signals), the Balanced Momentum calculation is used

Finally, the squeeze indicator breakouts have to confirmed by price action, i.e. Thrust Bars. For long signals, the signal bar has to close above the high of the previous bar. For short signals, the signal bar has to close below the low of the previous bar.

Source:  https://www.lizardindicators.com/squeeze-indicator/