The Squeeze Play is an evolution in my trading. My typical trade target is about 20 pips. The Squeeze Play in not original but rather a combination or fabrication of a number of strategies I have read and tried out over the last several years.
Basically it is an outgrowth of an evening breakout of the GBP/JPY, GBP/CHF and the GBP/USD. The approximate time is 11pm EST or for me on the West Coast at 8pm. The 3 currencies listed seem to give the best chance for a move. Others work well too, but these three currency pairs seem to give the best outcome. Other times of day work too, but not as consistent.
Indicators
Donchian Channels set at 30 (not required).
50 SMA (not required)
RSI14 35/65(recommended)
Either and…
Bollinger Bands and Keltner Channels
or…
TTM Squeeze on ThinkorSwim or MT4 Squeeze Trend Trade @ Forex Factory
The concept is a breakout trade. These markets often consolidate in the evening. When the BB falls with the KC that is the squeeze. The ThinkorSwim Squeeze Indicator shows red dots when there is a Squeeze. Then the trade is designed breakout of the channels. I usually set a target of 20 pips and a stop at about 22 pips. I use the DC to help set breakout levels and to set stops. The 50 sma helps determine trend. The trade often works best when the RSI is coming off oversold or overbought conditions. Oversold for Long and overbought for Short.
An example with the TTM Squeeze Indicator
An example with the Bollinger Band within the Keltner Channel
I mostly trade these three pairs, but last night I caught a nice USD/CAD long for 35 pips. If I set a trade at 11 pm EST I will often check it later and adjust the target and stops. The chart included here of the GBP/CHF is a very typical trade.
I have started this post simply for the purpose of discussion and sharing. I find trading a lonely experience. I have always been a breakout trader, buy the combination of the “Squeeze Concept” and the timing and the three pairs have made this work for me.
These directions are rather incomplete. I will attempt to answer questions and post charts of trades. There is much finesse in managing this strategy. I know that trade management is critical. When the market is wild and the price bars are not consistent it is best to stay out.
Greg
