Squeeze Score: Spotting Compressed Price Action Before It Breaks

Markets do not trend forever. They expand, contract, expand again. The squeeze score puts a number on that contraction so you can spot the quiet moments before the storm.

The simple version

The score runs from 0 to 100. It measures how narrow the recent trading range is, relative to the volatility this instrument normally produces.

• 0-30: range is normal or expanding. The market is doing its usual thing.
• 30-60: starting to compress. Worth keeping an eye on.
• 60-80: tightly coiled. Volatility is well below average. A breakout is increasingly likely.
• 80-100: extreme compression. Historically these levels do not last long, and the move that follows is often outsized.

The score is calculated on the 1-hour chart and updated every 15 minutes alongside the rest of the data.

What "compression" actually means

We track two things on each timeframe: how wide the Bollinger Bands are, and how the average true range compares to its own history. When both shrink at the same time, the score climbs. The bands narrow because closes are clustering. The ATR drops because the highs and lows of each bar are getting smaller. Put them together and you have a market that has lost interest in moving.

Markets that have lost interest in moving rarely stay that way. Either new information arrives and price breaks out, or one side of the order book gets bored and capitulates. Either way, the next swing tends to be bigger than usual.

Why compression works as a signal

There is forty years of evidence behind this. Volatility in financial markets clusters in time, alternating between calm and storm — the property Robert Engle won the 2003 Nobel Prize in Economics for modelling with ARCH and GARCH. Periods of low volatility statistically precede periods of high volatility, and vice versa. The squeeze score is a practical read on that property: it tells you when an instrument is sitting in the "calm" half of the cycle and is statistically due for the "storm" half.

The Bank for International Settlements Triennial Survey confirms what every forex trader experiences — average daily ranges for the majors compress sharply during Asian-session hours and around major holidays. Those compressions typically unwind during the London open, with the highest realised volatility concentrated in the London-New York overlap. The squeeze score makes that cycle observable per pair, in real time.

"Markets do not move at constant speed. They tighten when there is nothing new to price in, and the longer that tightening goes on, the more violent the eventual repricing tends to be. Spotting the coil before it springs is one of the highest-value things a screen can do for you."

— Nick, founder of Markets Mastered, professional trader since 1989

How to use it in practice

As a filter, not a signal

A high squeeze score does not tell you which direction the breakout will go. Long positions and short positions both lose money if you guess wrong on direction. Combine the squeeze score with the trends grid to pick a side:

• High squeeze plus higher timeframes bullish? Lean toward longs and wait for confirmation.
• High squeeze plus higher timeframes bearish? Lean toward shorts.
• High squeeze plus conflicting timeframes? The market is genuinely undecided. Wait.

Time the entry with the lower timeframes

Once compression has built up and you have a directional bias, the 15-minute and 1-hour trend columns help you catch the actual break. A 15-minute trend flip in the direction of your higher-timeframe bias, on an instrument with a squeeze score above 60, is one of the cleaner intraday entries the platform surfaces.

Size for the volatility regime

Squeezed markets often break with a single fast bar. If your stop is set based on the compressed range, that one bar will take you out before the real move starts. When the squeeze score is high:

• Place stops a little wider than usual, beyond the recent consolidation, not inside it.
• Reduce position size proportionally so the absolute risk stays where you want it.
• Expect the first 30 to 60 minutes of any breakout to be the choppiest.

What the score does not do

It does not predict direction. It does not guarantee a breakout will happen in the next bar, the next hour, or even the next session. Markets can stay compressed for a while.

What it does is filter the universe down to the small set of instruments that are statistically most likely to move soon, so you can focus your attention there instead of staring at 55+ charts.

A note on the methodology

The score is bounded at 100 because beyond a certain point, the message is the same: this market is unusually quiet. Whether it has been quiet for two days or two weeks does not really matter for the trade you are about to take. The number is a guide, not a prophecy.