The Squeeze Break forex indicator is a technical indicator that is based on the concept mentioned in John Carter’s book, Mastering the Trade.
The simple concept states that markets tend to move from periods of low volatility to high volatility and vice versa.
The Squeeze Break Metatrader 4 forex indicator is a mixture of Bollinger Bands and Keltner Channels.
These two amazing indicators are rightly combined to form a trade bias.
When the Bollinger Bands are outside the Keltner Channels, a green histogram is displayed in the positive region, and the market is said to be trending or volatile.
The Bollinger Bands are said to be inside the Keltner Channels when the red histograms are displayed in the negative region, which depicts a consolidating market.
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Indicator Chart (EUR/USD H1)
The EUR/USD H1 chart below displays the Squeeze Break Metatrader 4 forex indicator in action.
Basic Trading Signals
Buy Signal: Go long when the green histograms of the Squeeze Break Metatrader 4 forex indicator pop up in positive territory.
Sell Signal: Go short when the red histograms of the Squeeze Break Metatrader 4 forex indicator get aligned in negative territory.
Exit buy trade: Close all buy orders if while a bullish trend is running, the Squeeze Break indicator displays a red histogram below the zero signal level.
Exit sell trade: Close all sell orders if while a bearish signal is ongoing, the Squeeze Break indicator puts up a green histogram above the zero center line.
Tips: The Squeeze Break MT4 indicator is a range and trend filter, and while its simple form does allow it to function as a standalone technical indicator, a mixture with other technical tools is still of immense benefit.
Squeeze Break + NeuroTrend Forex Scalping Strategy for MT4
This strategy uses the Squeeze Break MT4 Forex Indicator together with the NeuroTrend MT4 Forex Indicator.
The Squeeze Break indicator helps detect when the market moves from quiet consolidation to a trending phase.
A green histogram indicates that the market is ready for a buy trade, and a red histogram indicates a sell trade.
NeuroTrend provides directional trend confirmation, showing a blue dot for a bullish trend and a red dot for a bearish trend.
Combining these indicators allows traders to scalp in the direction of the emerging trend.
This strategy works well on M5, M15, and H1 charts and is suitable for active scalpers focusing on liquid forex pairs.
Buy Entry Rules
- The Squeeze Break histogram is green, showing that a trend is forming.
- The NeuroTrend indicator shows a blue dot, indicating a bullish trend.
- Price is near a support area or within the middle range of the recent swing.
- Enter a long position at the close of the candle that shows the blue dot.
- Place a stop loss a few pips below the recent swing low or support level.
- Set a take profit target based on the next resistance level or a fixed number of pips, aiming for a risk-reward ratio between 1:1.5 and 1:2.
Sell Entry Rules
- The Squeeze Break histogram is green, showing that a trend is forming.
- The NeuroTrend indicator shows a red dot, indicating a bearish trend.
- Price is near a resistance area or within the upper range of the recent swing.
- Enter a short position at the close of the candle that shows the red dot.
- Place a stop loss a few pips above the recent swing high or resistance level.
- Set a take profit target near the next support level or a fixed number of pips, aiming for a risk-reward ratio between 1:1.5 and 1:2.
Advantages
- Combining trend confirmation and momentum reduces the likelihood of false signals.
- Entry signals are easy to interpret using a histogram and trend dots.
- Works on multiple intraday timeframes, including M5, M15, and H1.
- Stop loss and take profit levels are easy to define based on price action and trend.
- Effective for scalping during active trading sessions with sufficient liquidity.
Drawbacks
- Signals may lag slightly in very fast-moving markets, causing late entries.
- Short-term timeframes like M5 may be affected by spreads and broker execution speed, reducing net profitability.
- Not suitable for illiquid or exotic currency pairs due to high slippage and unreliable signal accuracy.
- Requires constant attention to market conditions; leaving trades unattended may result in losses if trends reverse quickly.
Example Case Studies
Case Study 1: EURUSD on M15
During the New York session, the Squeeze Break histogram turned green, indicating trend conditions.
NeuroTrend displayed a blue dot confirming a bullish trend.
Price was near 1.0920, close to a short-term support.
A long trade was entered at 1.0921 with a stop loss at 1.0908 and a take profit at 1.0950.
Price moved upward steadily and reached the target in 25 minutes.
The trade resulted in a gain of approximately 29 pips.
Case Study 2: GBPJPY on M5
During the Asian session, the Squeeze Break histogram turned green, showing an increase in volatility.
NeuroTrend displayed a red dot indicating a bearish trend.
GBPJPY was near 159.35 at a recent resistance.
A short position was entered at 159.34 with a stop loss at 159.50 and a take profit at 159.00.
Price moved downward and reached the take profit within 18 minutes.
The trade resulted in a gain of about 33 pips.
Strategy Tips
- Trade major and high liquidity pairs to reduce spreads and slippage.
- Do not trade when the Squeeze Break histogram is flat or switching frequently, as the market is likely ranging.
- Focus on active sessions such as London and New York because volatility and price movements are higher.
- Use strict position sizing and risk only a small portion of your account per trade.
- Combine entries with nearby support and resistance levels to improve accuracy for entries and exits.
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Download the “squeeze-break-indicator.ex4” Metatrader 4 indicator
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart window indicator
Customization options: Variable (Boll_Period, Boll_Dev, Keltner_Period, Keltner_Mull, Momentum_Period, Back_Bars, Alert_On, On_Screen_Info), width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Type: trend | volatility | momentum
