Master the TTM Squeeze: Explosive Breakouts with Simple Rules

FinancialWisdom
Aug 29
6 min read

Updated: Sep 7

Quiet → Squeeze → BOOM. In this video I show exactly how to trade to catch huge profits

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TTM Squeeze

Video Transcript Below:

The secret indicator that predicts explosive breakouts.

What if I told you there's a single indicator that could have predicted Rocket Lab's explosive run from $32 to over $53 in four weeks in June 2025? Or Tesla's massive breakout in 2019 that generated millions for those who caught it early? This isn't another momentum oscillator or volume indicator—this is something far more powerful that's completely overlooked by most traders.

I'm analyzing the same volatility cycles that legendary traders have used for decades to spot explosive moves before they happen. Today, I'll reveal the mathematical foundation behind this indicator, show you exactly how it predicted several of 2024's most explosive breakouts, and demonstrate why understanding volatility cycles is the difference between catching massive moves and watching them from the sidelines.

breakout trade example — Breakout trade example

The indicator we are discussing in this video is called the TTM SQUEEZE. So, let's dive in.

In breakout swing trading, there are two characteristics that the stock must display to be a potential trading candidate. One, an existing trend in the stock, and two, a base formation or volatility contraction that allows you to identify trade entry points and time them well.

While there are several pre-built screens like the Minervini Trend Template that can help you identify trending stocks, spotting bases has mostly been a manual phenomenon. One has to sift through hundreds of charts to shortlist stocks that were setting up for breakouts or showing traits of volatility contraction.

What if I tell you that's not the case anymore? You can use TTM Squeeze indicator to identify stocks that are displaying volatility contraction and readying themselves for massive potential breakouts like NVIDIA, Palantir, and more recently, Rocketlab and Robinhood.

Here is how the TTM Squeeze indicator is formed.

The base of the indicator are two indicators: Bollinger Bands and Keltner Channel. Both these indicators are bands around a moving average. However, there is one key difference in what is used on the upper bands. While Bollinger Bands use the Standard Deviation of closing prices in the look-back period, the Keltner Channels use the Average True Range or ATR to form the upper and lower bands.

In Bollinger Bands, when the prices are moving wildly in any direction, the bands expand. Therefore, when the closing prices in the look-back period are trending upwards, the moving average trends upwards, and standard deviation increases, which leads to broadening of the bands as higher values are being added to and subtracted from the moving average.

The opposite happens in the consolidation phase, as closing prices in the look-back period are bunched up together. The moving average flattens, the Standard deviation declines, and the bands squeeze.

It's very similar to how our group trades with our breakout scanner, looking for consolidations followed by a breakout.

The Keltner channels also see similar squeezes in periods of low volatility.

The TTM Squeeze indicator uses the confluence of squeezes in these two indicators to identify periods of extreme volatility contraction in a stock's price. It specifically looks for periods when the Bollinger Bands squeeze is inside the Keltner channel.

Let’s now understand how to set up this indicator.

There is no pre-built TTM Squeeze indicator on popular charting platforms. However, there is a workaround.

You can plot the Bollinger Band and Keltner Channel separately, and observe the squeeze. However, that will be a cumbersome method to identify the squeeze, figuring out when the Bollinger Squeeze is inside the Keltner Channel.

An easier way to plot the indicator is to use indicators generated by other users on TradingView. To do this, you type TTM Squeeze in the indicator search bar, and indicators from the community will show in the search results. I prefer the second one, TTM Squeeze Pro, as it allows us to customize the variables in the indicator.

The next thing we need to do is customize the indicator. In the indicator settings, we change the Keltner Channel # 2 value to 2 from 1.5. This essentially makes the squeeze a little less strict. If you want to focus on the rare but the best setup, you can use 1.5 ATR here. Statistically, the 1.5 ATR squeeze occurs less than 5% of the time, making it a rare and significant event.

Then we change colors in the style section. We change the colors of all the bars to one single color. Light grey makes it convenient to read on the chart.

Here is how it appears when plotted on the chart. High bars represent increased volatility, and lower bars represent low volatility. Negative bars represent extreme contraction in volatility. The red dots here mark the periods of extreme low volatility. These are the periods when the Bollinger Band squeeze falls inside the Keltner Channel.

The indicator is best used on weekly charts.

Let’s now understand how to use the TTM Squeeze for Maximum Effectiveness

First, as we are trading breakouts in trending stocks, the indicator should be applied to stocks coming out of any trend template. There, too, you can further filter by taking the top performers, say 90+ RS stocks.

Next, we see those stocks on charts to find the red dots. If the indicator isn't showing the red dots when the stock is in consolidation, give it a pass.

The main objective here is to shortlist stocks that have seen a significant decline in volatility. These are the stocks that can potentially break out for massive moves. The indicator makes it easier to spot these stocks, as you just have to look for the red dots.

Next, as several red dots line up on the chart, look for the appropriate breakout level or pivots based on the setup. For example, if the stock is setting up laterally, the appropriate breakout point will be the high of the consolidation. If it's a cup with a handle, the appropriate breakout point will be the high of the handle. Once you have the pivots figured out, set alerts for breakouts.

As the breakout happens, look for volume confirmation and enter no more than 5% beyond the pivot.

That’s it.

To see how it works, here are some real-world examples of TTM Squeeze Success

Here is the latest weekly chart of Robinhood. After this 170% run from Aug 24 to Feb 25, which saw a huge expansion in volatility, the stock went into a consolidation. As the consolidation furthered, the red dots started appearing on the TTM Squeeze indicator. If we flip to the daily chart, the stock formed this smaller cup with a handle within this large consolidation, providing an early entry. The red bars here also indicate a significant reduction in volatility. The pivot here was $51.3, and the stop loss at the low of this handle was $45.5. That's an 11% risk trade, which is a little high, so one would have to reduce the position size to take the trade. Once it broke out, the stock went up 121% in 71 days. That's a 1-to-11 risk-to-reward ratio.

Here is NVIDIA weekly from 2023. The red dots show a loss in volatility following this 350% move in the stock. Once it broke out from this tight pivot, which offered an entry with 6.5% risk, the stock went up another 200% in less than a year. That's a whopping 30x reward on the initial risk.

Here is another chart of Rocket Lab Corporation. The stock saw a massive move of 650% in this rally and went on to form this base. After the series of red dots signifying reduced volatility, it broke out again at $32 and went up 65% in less than a month.

Here is another massive mover - Applovin Corporation. After this 380% move, the stock saw a volatility contraction area with red dots appearing here. Once it broke out here at $44, with a 14% stop loss, it went up 100% before setting up again here. From this pivot of $95, it went up another 450% in eight months. That's massive outperformance.

The concept here is simple: you have to identify periods of extreme reduction in volatility, that is akin to building up of energy in the stock. The bigger the move before the consolidation, the higher the built-up energy in the consolidation.

Once the stock breaks out, this energy is released through institutional accumulation, leading to massive moves.

Here is a step-by-step process to make the most of this indicator:

Take the entire universe of stocks and filter them for size, say market cap of $2 billion and above.

Sort them in descending order based on their annual performance.

Pick the top 30 names in the list.

Look for consolidation zones with red dots in the TTM Squeeze indicator on the weekly chart and make a watchlist of those stocks.

Mark breakout pivots based on setups on daily or weekly charts and set alerts.

Enter on breakouts with a stop loss at the nearest swing low or low of the breakout day.

Exit based on your exit rules.

Remember, the market's biggest moves consistently emerge from periods of apparent calm. This isn't about gambling on breakouts—it's about positioning yourself where probability and mathematics converge. The examples we've examined—NVIDIA's 200% run, Robinhood's 121% surge, AppLovin's 450% explosion—all shared this common characteristic: extreme volatility contraction before the breakout.

The legendary traders understood this principle long before we had sophisticated indicators to measure it.

For those interested in using my breakout method and bespoke scanner, why not join us: https://www.financialwisdomtv.com/service