Structural Squeeze Box Breakout

Family: breakout · Regime: trending · Complexity: medium · Asset classes: Equities, Forex, Crypto-Majors · Timeframes: H1, H4, D1

Thesis

Market volatility is cyclical; periods of compression (Squeezes) often lead to impulsive directional moves. By anchoring these expansions to structural range breakouts (Boxline) and verifying the impulse with momentum (ROC), we can identify high-probability trend entries while using MACD to exit before the trend reaches complete exhaustion.

Components

• Boxline (Dynamic Range Breakout) (regime) — Defines the global market regime; we only trade in the direction of the latest structural breakout.
• Rate of Change (ROC) (direction) — Filters for positive/negative momentum to ensure we are not entering against the prevailing flow.
• Keltner Channels (entry) — Entry is triggered on a breakout of the Keltner Upper/Lower band following a squeeze.
• MACD (exit) — Used as a momentum-exhaustion exit to capture the meat of the move before a reversal.
• Parabolic SAR (risk) — Provides a dynamic, accelerating trailing stop to protect capital during trend development.
• Bollinger Bands (volatility_filter) — The Volatility Squeeze (Bollinger within Keltner) identifies periods of low volatility coiling before an impulsive entry.

Known failure conditions

• Price enters a prolonged 'Boxline' consolidation that lasts more than 50 bars.
• MACD Histogram shows persistent divergence against the price trend without hitting the exit target.
• SAR stop is hit within 3 bars of entry more than 4 times consecutively (indicates false breakouts).

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