Squeeze & Release

Introduction: The Squeeze & Release by AlgoAlpha is an innovative tool designed to capture price volatility dynamics using a combination of EMA-based calculations and ATR principles. This script aims to provide traders with clear visual cues to spot potential market squeezes and release scenarios. Hence it is important to note that this indicator shows information on volatility, not direction.

EMA Calculations: The script utilizes the Exponential Moving Average (EMA) in multiple ways to smooth out the data and provide indicator direction. There are specific lengths for the EMAs that users can modify as per their preference. ATR Dynamics: Average True Range (ATR) is a core component of the script. The differential between the smoothed ATR and its EMA is used to plot the main line. This differential, when represented as a percentage of the high-low range, provides insights into volatility. Squeeze and Release Detection: The script identifies and highlights squeeze and release scenarios based on the crossover and cross-under events between our main line and its smoothed version. Squeezes are potential setups where the market may be consolidating, and releases indicate a potential breakout or breakdown. Hyper Squeeze Detection: A unique feature that detects instances when the main line is rising consistently over a user-defined period. Hyper squeeze marks areas of extremely low volatility.

The main line (ATR-based) changes color depending on its position relative to its EMA. A middle line plotted at zero level which provides a quick visual cue about the main line's position. If the main line is above the zero level, it indicates that the price is squeezing on a longer time horizon, even if the indicator indicates a shorter-term release. "𝓢" and "𝓡" characters are plotted to represent 'Squeeze' and 'Release' scenarios respectively.