Bollinger Band Squeeze - Volatility Breakout

// This Pine Script™ code is subject to the terms of the Mozilla Public License 2.0
// © TradingTools

//@version=5
strategy("Bollinger Band Squeeze - Volatility Breakout", overlay=true, default_qty_type=strategy.percent_of_equity, default_qty_value=100)

// ─── Inputs ───
bbLength        = input.int(20, "BB Length", group="Bollinger Bands")
bbMult          = input.float(2.0, "BB StdDev Multiplier", step=0.1, group="Bollinger Bands")
kcLength        = input.int(20, "Keltner Channel Length", group="Keltner Channel")
kcMult          = input.float(1.5, "KC ATR Multiplier", step=0.1, group="Keltner Channel")
momLength       = input.int(12, "Momentum Length", group="Momentum")
useVolConfirm   = input.bool(true, "Require Volume Confirmation", group="Filters")
volLength       = input.int(20, "Volume MA Length", group="Filters")
volMult         = input.float(1.2, "Volume Multiplier", step=0.1, group="Filters")
atrLength       = input.int(14, "ATR Length", group="Risk Management")
atrMult         = input.float(2.0, "ATR Multiplier for SL", step=0.1, group="Risk Management")
rrRatio         = input.float(2.5, "Risk:Reward Ratio", step=0.1, group="Risk Management")

// ─── Bollinger Bands ───
bbBasis = ta.sma(close, bbLength)
bbDev   = ta.stdev(close, bbLength) * bbMult
bbUpper = bbBasis + bbDev
bbLower = bbBasis - bbDev

// ─── Keltner Channel ───
kcBasis = ta.ema(close, kcLength)
kcAtr   = ta.atr(kcLength)
kcUpper = kcBasis + kcAtr * kcMult
kcLower = kcBasis - kcAtr * kcMult

// ─── Squeeze Detection ───
// Squeeze = BB inside KC (low volatility)
squeeze     = bbLower > kcLower and bbUpper < kcUpper
noSqueeze   = not squeeze
squeezeFire = noSqueeze and squeeze[1]  // squeeze just released

// ─── Momentum (linear regression) ───
mom = ta.linreg(close - bbBasis, momLength, 0)
momUp   = mom > 0 and mom > mom[1]
momDown = mom < 0 and mom < mom[1]

// ─── Volume ───
volMA   = ta.sma(volume, volLength)
volOK   = useVolConfirm ? volume > volMA * volMult : true

// ─── ATR ───
atrVal  = ta.atr(atrLength)

// ─── Entry Conditions ───
longCondition  = squeezeFire and momUp and volOK
shortCondition = squeezeFire and momDown and volOK

// ─── Execute Trades ───
if longCondition and strategy.position_size == 0
    sl = close - atrVal * atrMult
    tp = close + (close - sl) * rrRatio
    strategy.entry("Squeeze Long", strategy.long)
    strategy.exit("Squeeze Long Exit", "Squeeze Long", stop=sl, limit=tp)

if shortCondition and strategy.position_size == 0
    sl = close + atrVal * atrMult
    tp = close - (sl - close) * rrRatio
    strategy.entry("Squeeze Short", strategy.short)
    strategy.exit("Squeeze Short Exit", "Squeeze Short", stop=sl, limit=tp)

// ─── Plotting ───
plot(bbUpper, "BB Upper", color=color.new(color.blue, 30))
plot(bbBasis, "BB Basis", color=color.new(color.blue, 60))
plot(bbLower, "BB Lower", color=color.new(color.blue, 30))

// Squeeze dots on the zero line
bgcolor(squeeze ? color.new(color.orange, 85) : na, title="Squeeze Active")

plotshape(longCondition, title="Squeeze Long", location=location.belowbar, style=shape.diamond, color=color.lime, size=size.small, text="SQZ")
plotshape(shortCondition, title="Squeeze Short", location=location.abovebar, style=shape.diamond, color=color.red, size=size.small, text="SQZ")

// ─── Alerts ───
alertcondition(squeeze and not squeeze[1], title="Squeeze Started", message="BB Squeeze: Volatility compression detected")
alertcondition(longCondition, title="Squeeze Long Breakout", message="BB Squeeze: Bullish breakout from squeeze")
alertcondition(shortCondition, title="Squeeze Short Breakout", message="BB Squeeze: Bearish breakout from squeeze")