📖Volatility Zones & Squeeze Bands
Play low-volatility squeeze breakouts for tremendous gains; manage risk!
Overview
[E5 Trading] Squeezes & Breakouts lets traders know whenever price action is in a low-volatility squeeze for any asset on any timeframe.
Squeeze shading shows on the chart, and real-time streaming squeeze signals are sent to the E5 Trading Discord for each of five [5] timeframes, including Daily, 4-hour, 1-hour, 15-minute, and 5-minute.
Volatility Zones & Squeeze Bands
[B] Volatility Bands default is [On].
Gradient shading represents reversal zones based on Bollinger Bands.
The likelihood of price reversion towards the mean [basis] increases the further price action pushes into the darker shaded zones.
The middle area with no shading [i.e., the same color as the chart background] is the Keltner channel.
The Keltner channel is another volatility-based method to identify breakouts and mean reversion trading opportunities.
Keltner channel boundaries calculate using the exponential moving average [EMA] and Average True Range [ATR].
Example 1: Volatility Zones
Volatility Basis
[C] Toggle [Volatility Basis] to display the basis line [i.e., mean] of the volatility bands. Default [Off].
The Basis line can be used as a critical support | resistance level that price action often respects.
Example 2: Volatility Bands with Basis Line
Squeeze Bands
[D] Toggle [Squeeze Bands] to display 'the squeeze' when price action is in a low-volatility range. Default [On].
Example 3: Volatility Zones with Squeeze Bands
Squeeze Channel Fill
[E] Toggle [Squeeze Channel Fill] to enhance visualization of the squeeze by shading the low-volatility channel in between the squeeze bands. Default [On].
Example 4: Volatility Bands with Squeeze Bands, Squeeze Fill Shading, and Squeeze Table
The color setting of the squeeze bands controls the color of the channel fill and the squeeze table in the lower-right corner of the chart.
Squeeze Table
[F] Squeeze Table can be toggled on and off by the "Tables" feature found on the Style tab of the [E5 Trading] Squeezes & Breakouts menu.
The Squeeze Table appears in the lower right-hand corner of each chart when the [E5 Trading] Squeezes & Breakouts indicator is turned on. Refer to Example 4 above and Example 5 below.
The squeeze table displays the squeeze status on the current timeframe plus the commonly used higher timeframes for each asset.
The squeeze table will indicate “Sqz On” next to the respective timeframe whenever a squeeze occurs. The timeframes available in the squeeze table are W, D, 4H, 1H, 15m, and 5m.
In the below example, the chart is on the 5-minute timeframe. The trader can observe the squeeze status on the 5-minute timeframe and all higher timeframes. In this example, there is an active squeeze only on the 4-hour [4H] timeframe.
Note: The Weekly timeframe was added after the below chart showing the Squeeze Table was created.
Example 5: Volatility Bands with Squeeze Bands, Squeeze Fill Shading, and Squeeze Table
In the following example, the chart is again on the 5-minute timeframe, and the squeeze table includes squeeze status for all available timeframes [i.e., W, D, 4H, 1H, 15m, 5m].
The squeeze table shows an active squeeze on the 5m, 15m, and 4H timeframes.
Example 6: Volatility Bands with Squeeze Bands, Squeeze Fill Shading, and Squeeze Table
E5 Trading team members like to scalp on the 5-minute timeframe using Squeeze Breakouts. We use a tight stop-loss and are ready to take the opposite position if the breakout becomes a fakeout. If a fakeout occurs, we use the Squeeze Breakout Reversal signal to confirm the fakeout and enter the reversal trade.
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