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Volatilitybreakout

Dollar-Yen Compression Coil: A Breakout is Brewing🧠 Why This Matters Right Now USD/JPY has been tightly range-bound for the past 7 sessions, hugging the underside of 154.50, a historically significant resistance level. With U.S. inflation coming in hotter than expected and the Bank of Japan stepping back from policy tightening, this tug-of-war has compressed price action into a tight coil. A volatility eruption is right around the corner. 🔍 Breakdown of the Strategy This is a volatility compression breakout setup based on the logic that low volatility precedes expansion. The ingredients: Bollinger Bands (20, 2) for detecting squeeze zones ADX (14) under 15 to confirm low trend strength Price range compressing within 0.5% Entry Logic: 📈 Long: Close above upper Bollinger Band + ADX > 20 📉 Short: Close below lower Bollinger Band + ADX > 20 Stops & Targets: Stop Loss: Just inside the opposite Bollinger Band Take Profit: 2× ATR(14) 🚀 Why This Works in Today’s Market The policy divergence between the U.S. and Japan is creating a classic fundamental standoff, but the price can't stay neutral for long. Volatility is compressed to its limits. When the breakout comes, it's likely to run fast and clean in the direction of the imbalance. 🤖 Automate It with PineScriptAI With PineScriptAI, you can instantly: Detect when Bollinger Band width narrows Monitor ADX thresholds Set up conditional breakout logic with smart alerts and backtests Create a dual-trigger script that catches either direction — no need to guess the breakout side. ⚡ From Trend to Code — Instantly This isn’t just a chart pattern — it’s a recurring market phenomenon. With PineScriptAI, you can adapt this same logic to GBP/JPY, EUR/JPY, or even gold compressions with zero manual tweaking. 🧭 Final Insight FX:USDJPY When price coils, energy builds. Don’t just watch it break — code it, trade it, and scale it across markets with PineScriptAI.
NASDAQ:AAPL
by PineScriptsAI
RBOB Bollinger Band SqueezeThe RB1! Bollinger Bands bandwidth has narrowed to the narrowest width in 11 months as can be seen via the BandWidth indicator. Such a collapse in volatility usually precedes a volatility breakout in either direction. A Bollinger Band squeeze, which is a type of volatility breakout setup, is triggered when the bandwidth puts in a 6-month low which is a condition that has been achieved. This criterium is defined in the book “Bollinger on Bollinger Bands” by John Bollinger in the chapter "The Squeeze." The book states that a squeeze may oftentimes head fake and that a parabolic SAR (PSAR) may be used as a reversal trigger for an open trade or a trigger point for opening a new position in the direction price was heading when it hit the PSAR. Volume indicators and other technicals should be used to try and determine the direction of the squeeze and that is what I’ve done. Accumulation/Distribution% which is detailed in the book and linked below as an indicator I’ve published is trending down which is not necessarily the suggested use of the indicator but it was the best hint I could find about the direction of the breakout. %B is also trending down which again isn’t the intended use of the indicator but there’s not much else to go by. There’s a trendline which suggests going short and the 20-day sma is sloping downward which also suggests going short although it is pretty close to rolling up. Last time I noticed a squeeze setup was in soybeans and it broke out in the direction of the prior couple months which was down and is currently down with RBOB. The soybean idea is linked below. I’ve come up with down as the anticipated direction of the squeeze breakout with a stop (and reverse if practical) at the PSAR (blue dots trailing stop) and a target of 1.9315 at the lower channel line which should fall above the previous low of 1.8799. I will not actually be trading this because the notional value of 1 contract is $99,531 which is too high for me right now and it’s not a high conviction trade idea, more of a “I think this is what’s gonna happen, but it can go either way” type deal. It can head fake in one direction and break out in the other. If anyone has any ideas on which direction the volatility breakout is likely to be in based on technicals or fundamentals, please share. Accumulation/Distribution% indicator: Soybean Bollinger Band Squeeze idea:
NYMEX:RB1!Short
by Skipper86
1
Volatility Breakout Trading ExplainedIn this post, I'll be taking you through a step by step guide on what the volatility breakout trading strategy is, and how you could incorporate it in your own trading style. Disclaimer: This is not investment advice. This is for educational and entertainment purposes only. I am not responsible for the profits or loss generated from your investments. Trade and invest at your own risk. The Volatility Breakout Strategy - This strategy was designed by Larry Williams, a legendary trader. - The premise of this strategy is based on trends; what goes up, continues to go up - Based on this idea, the calculation and strategy is actually quite simple: Strategy - The Range can be calculated by subtracting the values of the daily high from the daily low; Range = High - Low - Base Price, or Entry Price = Previous Day's Candle Close + (Range * K), with K being a constant of 0.6 to represent the noise ratio. - If today's price exceeds the base price, you enter a position. - The next day, you sell all your positions at the daily open price. Example - The diagram above demonstrates an example case - We have an asset that had a daily range of $100. - Calculating the base price, we get $1020. - This means that if the price exceeds $1020 on the second day, we buy the asset and ride the momentum. - On the third day, we sell all positions at the market open price. - If the price of the asset reaches $1100 on the third day, that gives us 7.84% returns. - If it retraces back to $1000 in its opening price, we have a 1.96% loss. - This demonstrates that not only is the risk/reward ratio optimal, we have a statistical edge in our position because we're following the trend Strengths of the Volatility Breakout Strategy - Because we're trading purely based on volatility, and trading short term by selling all positions the next day, it helps us not to be swayed by market psychology. - Trends are a reflection of market psychology, and as human traders, we can get swayed by our emotions of greed and fear - However, through a systematic approach based on precise entry and exit points and strategies, we can ignore the noise from the market. - Because the trend is our friend, unlike reversal trading strategies, we have a statistical edge in our position, and risk/reward ratio. Conclusion Implementing this strategy directly in today's market might not be as effective, but an understanding of how legendary traders approached the market back in the day can certainly help you understand what you need to do to methodically approach the market. Taking your emotions out of the game, and having strict rules and invalidation points are key to becoming a successful trader. If you like this educational post, please make sure to like, and follow for more quality content! If you have any questions or comments, feel free to comment below! :)
NASDAQ:TSLAEducation
by Michael_Wang_Official
8