The squeeze is the central concept of Bollinger Bands. When the bands are close together and restrict the moving average, this is called a squeeze. A squeeze signals a period of low volatility and is seen by traders as a potential sign of increased volatility in the future and potential trading opportunities. A price move outside of the bands can signal the security is ripe for a reversal, and options traders can position themselves accordingly. For instance, after a breakout above the top band, the The bearish pressure eventually overwhelmed the support line and produced a profitable short trade. Important: This isn’t always the case; the bears can be exhausted while attempting to break the support level. When the bears are out of steam, the bulls have no resistance and bullish breakouts can occur. Squeeze Patterns This is a derivative of John Carter's "TTM Squeeze" volatility indicator, as discussed in his book "Mastering the Trade" (chapter 11). Black crosses on the midline show that the market just entered a squeeze (Bollinger Bands are with in Keltner Channel). This signifies low … To better understand why GameStop stock made world headlines last month, and why you should be careful when investing, we must first explain the short squeeze. Short Squeeze 101. A “short” is done under the table – you must know someone who owns stock that everyone believes is overvalued and will keep dropping in value. Short sellers can thus cause prices to fall rapidly because they accelerate their already existing downward movements. But they also help the market and a recovery through the shorties is also conceivable. The Short Squeeze. The term short squeeze is used again and again and is difficult for some to understand.
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