PBF Squeeze indicator is an oscillator that helps traders grasp the change in trend. Although the indicator lags, it can be useful for traders in many ways. The article will outline the indicator’s usage, advantages, and disadvantages.
What is the PBF Squeeze indicator?
The PBF Squeeze indicator appears at the bottom window of the chart. It works the same way as MACD or any other oscillator. The basic functions of the indicator include:
- Gauging trend
- Pointing trend reversal
- Signaling market volatility.
Hence, the traders can use it not only as a main strategy, but they can also take advantage of an indicator for their confirmatory analysis.
The histogram comes with red and green colors, representing bullish and bearish biases. Here’s how it looks on the chart:
PBF Squeeze Trading Strategy
The PBF Squeeze indicator has mainly three parts:
- Zero line
- Countertrend mode
You can build an independent trading strategy based on any of the three parts. So, let’s discuss them one by one.
You can take advantage of histograms in many ways. The most common way to trade the histogram is to look at the rising green or red bars. These indicate a strong bullish or bearish trend. Similarly, if the bars are falling, it shows a weakening of the trend and potential trend reversal.
You can also use histograms to trade divergence. For example, if the price forms two higher highs on the chart while the histogram shows a higher high succeeded by a lower low, it is a valid bearish divergence, and you can opt for a short trading opportunity.
The most common trading strategy of the indicator is to use the zero line. As soon as the indicator prints a bar above the zero line, you can consider it a long trading opportunity. Similarly, if the bar falls below the zero line, this shows a bearish trend reversal.
The countertrend mode allows you to enter the market quickly against the trend to catch the correction. For that, look for a bearish or bullish peak of the histogram and then find the opposite trading opportunities accordingly.
PBF Squeeze buy signal
- Wait for the histogram bar to move above the zero line.
- Wait for a bullish candle to close to enter the long trade.
- You could place the stop-loss below the recent swing low.
- You could place take profit at the next resistance level or manually exit when the indicator turns below the zero line.
PBF Squeeze sell signal
- Wait for the histogram bar to move below the zero line.
- Wait for a bearish candle to close to enter the short trade.
- You could place the stop-loss below the recent swing high.
- You could place take profit at the next support level or manually exit when the indicator turns back above the zero line.
PBF Squeeze pros and cons
- The indicator can be used in many ways.
- It can be used in any market.
- You can use it for both scalping and day trading.
- The indicator is lagging.
- It may generate false signals on lower timeframes.
The PBF Squeeze indicator has many options to use as a trader. You can take advantage of divergence, histogram, and zero line. However, always test the strategy on a demo account before going with a live trading account.
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