Bollinger Squeeze Breakout

Bollinger Squeeze Breakout is a volatility breakout strategy for the low-volatility → trending transition. Periods of unusually quiet price action (a "squeeze", when the Bollinger Bands pinch to their narrowest in weeks) tend to resolve in explosive directional moves. The strategy buys when price breaks above the upper Bollinger Band while the band width is below its lowest value of the past 20 bars, and exits when price falls back below the middle band. It is the volatility-regime cousin of Bollinger Mean Reversion: both read the same bands, but this one bets with the range expansion instead of against a stretched move.

It is a medium, low volatility → trending, 1H–Daily strategy for stocks and crypto.

How it trades

Bollinger Band width (upper band minus lower band, i.e. 4 standard deviations at the default multiplier) is a direct read of recent volatility. When it undercuts everything seen over the lookback, the market is coiled; a close above the upper band on that same bar is the spring releasing upward.

Buy (breakout out of a squeeze):

Close > UPPERBOLLINGER(20,2) AND BBWIDTH(20,2) < LOWEST(BBWIDTH(20,2),20)

Sell (band exit - move has faded back through the mean):

Close < MIDDLEBOLLINGER(20,2)

Requiring both legs on the same candle is what filters ordinary band pokes: an upper-band close during normal volatility is just a strong day, but an upper-band close while the bands are at a 20-bar low in width is a range expansion beginning from maximum compression.

The LOWEST(...) window covers the 20 bars before the current one (the same convention as the plain LOWEST function). That exclusion matters: with the current bar's width included in its own window, the strict < could never be true.

When it works best

Best on instruments that alternate between long consolidations and sharp directional expansions - momentum stocks and crypto - on 1H to daily timeframes, where it captures the explosive first leg out of a base. Its weakness is false breakouts: a squeeze can resolve with one strong candle that immediately fails, and the middle-band exit gives back meaningful ground on sharp reversals. Volume confirmation or a wider breakout margin are natural tightenings when the false-break rate is too high.