📖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].

Menu: Volatility Zones

• 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 Bands; click image to enlarge

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.

Menu: Volatility Basis

Example 2: Volatility Bands with Basis Line

Volatility Basis [gray line in the middle of the bands]; click image to enlarge

Squeeze Bands

• [D] Toggle [Squeeze Bands] to display 'the squeeze' when price action is in a low-volatility range. Default [On].

Menu: Squeeze Bands

Example 3: Volatility Zones with Squeeze Bands

Squeeze Bands without Channel Fill shading; click image to enlarge

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].

Menu: Squeeze Channel Fill

Example 4: Volatility Bands with Squeeze Bands, Squeeze Fill Shading, and Squeeze Table

TradingView: Squeeze Visualization - Squeeze Bands with Channel Fill; click image to enlarge

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.

Menu: Squeeze Tables on Style Tab

• 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

Low-volatility squeezes shown with Squeeze Bands and Squeeze Channel Fill; click image to enlarge

• 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

Squeeze Table on 5m timeframe with squeezes simultaneously occurring over multiple timeframes; click image to enlarge

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.