What is Bollinger Band Squeeze?
2026-02-14
The Setup Everyone Misses
Most crypto traders chase momentum. They buy when price is already moving and sell when it’s too late. But what if you could detect the moment before a big move happens?
That’s what Bollinger Band Squeeze does.
How It Works
Bollinger Bands measure volatility by plotting standard deviations around a moving average. When volatility drops, the bands contract. When it rises, they expand.
The Squeeze happens when Bollinger Bands contract inside the Keltner Channel — meaning volatility has compressed to an extreme level. Like a spring being compressed, the market is storing energy.
Normal state: BB width = wide (high volatility)
Squeeze state: BB width = narrow (low volatility)
Expansion: BB width suddenly increases → potential tradeWhy It Matters for Crypto
Crypto markets cycle between:
- Consolidation — low volume, tight range, boredom
- Expansion — sudden moves, high volume, liquidations
The Squeeze detects the transition point. It doesn’t predict direction — it identifies when a big move is likely.
The Catch
Squeeze alone isn’t a trading signal. You need:
- Volume confirmation — is real money behind the move?
- Direction filter — which way is the expansion breaking?
- Risk management — what if the signal is wrong?
This is why PRUVIQ combines Squeeze detection with multiple filters before entering any trade. Every parameter is backtested on 500+ coins.
Key Takeaway
Volatility compression precedes volatility expansion. The Squeeze doesn’t predict — it identifies moments of maximum potential.
Understanding this pattern is fundamental to algorithmic trading. Whether you use it for entries, exits, or just market awareness, it’s one of the most reliable statistical patterns in financial markets.
This is educational content. Not financial advice.