The indicator designed by LazyBear is a good tool based on the TTM Squeeze indicator. Source.
Little and high
With face pace markets, we can use the in our favour. Being able to tell if a market is trending, correcting or range bound should be easy for us to see. So direction and momentum is an important early step for charting. We identify resistance and support to give us an idea of a market when it is in a range.
One tool to help us identify activity in a range bound market is the . It is primarily used to help us see over bought or over sold conditions. A common strategy is to look for candles breaking the upper limit of the or the lower limit. Though it could be used to help small move trades. It is usually a means to identify and tag movements rather than use it as a signal to buy or sell. It is a great way to gauge trends. Simple and elegant.
Having the ability to take tools that work for us and improve their functionality to better fit our particular needs can give us great advantages. Through the use of two sets of , traders can achieve a greater level of analytical precision. Though there is little difference, The Channel is taking two to find an . One important thing to note, how the channels are created, the interpretation is generally the same. What we can do with the channel is help us identity a squeeze in momentum (in the channel) or an increase in (out the channel).
Squeeze and the Triangle Breakout
Using the LTC/USD chart on 1D time frame. We see two significant dotted lines. The red descending that stretches back to the all time high. The green dotted up-trend line that stretches back to March 2017. Looking at the Squeeze you can see a similar triangle within the upwards and downward trend movements.
The bright green/red bars help us identify if these micro trends are going with their for a longer duration. You can see when these movements break down back to the . They change to a darker shade to show reversal movement.
The white cross on the median tell us when there is increased . The black crosses on the tells us when there is a momentum squeeze.
Putting it together
In this particular case, we see the positive momentum breaking down towards then end of our triangle. This would still be considered positive until the white cross on the switches to black. This had happened and is marked by the first set of white vertical lines on March 3rd. Ironically 1 year from where this uptrend line has been established. A few days of sideways movement is noticeable. This tells us of a high likelihood to a move of negative . On the second set of white vertical lines we see the breakout to the negative. This could be spotted by the swap to negative indication. SMI can be a powerful tool to help us see and predict increase to the negative or positive. In this case, we were nearing the end of a triangle. With the clues we saw. We had a strong chance of guessing which direction this breakout would occur. Next step is to watch for the median cross to change to white. Here it would mean further to the negative.