Pattern Detail

Bearish Squeeze Alert

Three-candle bearish reversal after a rally: each candle's range fits inside the one before it, coiling into a tighter and tighter squeeze.

A real Bearish Squeeze Alert on NQ daily bars, Aug 9, 2018. Price then followed through 1.2% over the next 5 bars. The bright candles are the pattern; the dimmed bars are surrounding context.
A real Bearish Squeeze Alert on NQ daily bars, Aug 9, 2018. Price then followed through 1.2% over the next 5 bars. The bright candles are the pattern; the dimmed bars are surrounding context.
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How to read this

Everything here is in R, the setup's own risk. 1R is the distance from the entry (the pattern's closing price) to where it would be proven wrong — its highest high over the 3 bars that form it. So "offered 2R" means price ran twice that distance in your favor at some point before the stop. It does not assume you took profit there: a target is a strategy choice.

Room offered (≥ 1R)

45.0%

Reliable

Offered at least 1× its risk before the stop, vs 41.5% for a random short entry (+3.5 pts).

Move size vs normal

0.86×

Realized range over the next 20 bars vs a random bar. Precedes a quieter stretch.

Typical room (20-bar)

1.15R

Average run in favor (capped at 3R), vs 1.07R for a random short entry.

Summary

Offered at least 1R of room 45.0% of the time vs 41.5% for a random short entry — a 3.5-point gap, wider than the ±1.4-point margin of error from chance, and it holds across the sample. A real, if modest, tendency to offer more room than the market alone.

Room offered, this setup vs a random short entry

Outcome This setup Random entry Edge
Offered ≥ 1R 45.0% 41.5% +3.5
Offered ≥ 2R 30.7% 27.0% +3.8
Offered ≥ 3R 22.2% 18.8% +3.4
Stopped < 1R 54.4% 55.6% -1.2
Went sideways 0.6% 2.9% -2.3

4,671 occurrences · 1,162,047 random-entry controls · 20-bar horizon

A squeeze alert is a market coiling up near a top. After a rise, an up candle leads, then each following candle fits inside the range of the one before it. The bars get smaller and smaller, like a spring winding tight. Range is draining out of the move, and that squeeze near the high often breaks downward.

How to spot it

  • The market is rising into the pattern.
  • The first candle is an up (green) candle.
  • The second candle’s range fits inside the first.
  • The third candle’s range fits inside the second.
  • Each bar is narrower than the last, coiling into a tighter and tighter squeeze.

The dashed box on the chart above marks the three candles on a real occurrence, with the advance before and the move after.

The psychology

After a rise, the first up candle leads and buyers still look in charge. Then each bar that follows fits inside the range of the one before it. The second is narrower than the first, the third narrower than the second. The market is coiling near the high, like a spring winding tighter.

That tightening means neither side is winning ground. Buyers can no longer extend the move, but sellers have not taken over either, so price compresses into a smaller and smaller band right at the top. Pressure builds with nowhere to go, and a move that has stopped making new highs is a move that has lost its push. When a squeeze like this near a high finally releases, the break tends to come out the downside, where the stalled buyers give way.

A coil near the top points to a break without saying it will fall. The figures below show which way these squeezes have tended to resolve.

Does it actually work?

A pattern is a setup, not a trade, so the honest question is not “did it win” but “how much room did it tend to offer before it was proven wrong.” The tabs below answer that across five futures markets (Nasdaq, S&P 500, gold, crude oil, natural gas) and seven timeframes from one minute to one day.

For each occurrence we measure the room the move offered in units of the pattern’s own risk, then set it against what a random entry on the same market would have done. When the pattern offers more room more often than chance, that shows up as a real edge. When it does not, the page says so plainly.

Read it with the sample size in view. On the faster timeframes a pattern can fire thousands of times, enough to trust. On the daily chart it is far rarer, so treat those numbers as a hint rather than a verdict. Thin samples are flagged for you on the page.

How we measured it

  • Entry is the close of the final candle of the pattern.
  • One unit of risk, 1R, is the distance from that close up to the pattern’s invalidation point: the highest high of the three candles that form it. If price trades through there, the setup is wrong.
  • We then follow the next 20 bars and record how far price ran in your favor, in multiples of that risk, before the stop was hit.
  • Every figure is set against a random entry on the same market and timeframe, so the market’s own drift is accounted for.
  • No profit target and no position sizing. Where you take profit is a strategy choice; this measures only the room the pattern tends to give.

What this page does not cover

  • Volume on the pattern’s candles.
  • Whether the pattern forms at a meaningful resistance level.
  • Pairing it with a trend filter or a confirming signal.
  • A profit target or position sizing. We use the pattern’s own invalidation point as the stop to define risk, but where you take profit, and how much you put on, are strategy decisions this page leaves to you.

Sample Bearish Squeeze Alert Firings (20)

Based on data through Apr 29, 2026

Time Risk (pts) Room offered Result
Apr 28, 2026, 3:25 PM CDT 7 2.14R Ran ≥1R
Apr 23, 2026, 4:40 AM CDT 11.75 2.85R Ran ≥1R
Apr 22, 2026, 12:30 PM CDT 16.75 3.00R Ran ≥1R
Apr 22, 2026, 10:30 AM CDT 15.75 2.27R Ran ≥1R
Apr 21, 2026, 6:01 AM CDT 6.5 0.00R Stopped
Apr 17, 2026, 1:20 AM CDT 9 2.56R Ran ≥1R
Apr 16, 2026, 12:45 AM CDT 3.5 0.00R Stopped
Apr 15, 2026, 6:55 AM CDT 49.75 0.76R Stopped
Apr 15, 2026, 3:40 AM CDT 6 0.79R Stopped
Apr 13, 2026, 6:15 PM CDT 9.25 3.00R Ran ≥1R
Apr 13, 2026, 3:20 PM CDT 8.75 0.40R Stopped
Apr 13, 2026, 2:00 PM CDT 8.5 1.76R Ran ≥1R
Apr 13, 2026, 1:10 AM CDT 4.5 0.00R Stopped
Apr 9, 2026, 11:00 PM CDT 3.25 3.00R Ran ≥1R
Apr 9, 2026, 7:15 AM CDT 11.25 2.04R Ran ≥1R
Apr 9, 2026, 4:35 AM CDT 11 0.36R Stopped
Apr 7, 2026, 9:30 AM CDT 32.5 3.00R Ran ≥1R
Apr 2, 2026, 1:15 PM CDT 19.25 1.36R Ran ≥1R
Apr 1, 2026, 3:40 AM CDT 6.25 2.48R Ran ≥1R
Mar 31, 2026, 10:20 AM CDT 24.25 3.00R Ran ≥1R

Sample backtests (2)

Real backtested runs of this pattern, with commissions and slippage. Open one for the full equity curve and metrics, or backtest it yourself on your own contract and dates.

Backtest this pattern

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