Forex Trading: Euro currency ready to breakout?

by Joe Oliver, Forex Trading-Pips

Forex Trading: Volatility in Euro currency has contracted the past 3 weeks creating a squeeze on the daily and weekly time frame. Contracting volatility typically precedes a breakout move.

What is the squeeze indicator and how does it work?

The Squeeze indicator is based on Keltner Channels and Bollinger Bands. When volatility contracts the Bollinger Bands ‘squeeze’ inside the Keltner Channels creating red dots on the squeeze histogram. Whilst the indicator remains in squeeze the market is in a low volatility condition and building up energy for the next move, higher or lower. The setup is triggered when the Bollinger Bands move back outside the Keltner Channels. Traders can follow momentum on the breakout using volatility breakout methodologies and achieve rapid entry out of the low volatility consolidation. Breakouts from low volatility periods typically catch many traders off guard as they have become biased towards mean reversion strategies, selling high and buying low.

Forex Trading, EUR daily bars squeeze

Forex Trading, EUR daily bars squeeze