FeraTrading Compression Flow v1

The FeraTrading Compression Flow Indicator v1 is a directional compression breakout filter that visualizes high-probability breakout conditions using dynamic range bands and momentum-based color cues. It’s built to help traders recognize when the market is transitioning from low-volatility compression into a strong, directional phase.

🔍 How It Works
The core logic combines volatility compression, momentum alignment, and range expansion to detect breakout conditions. Once these conditions are met, the indicator plots visual bands that reflect current breakout bias.

Volatility Compression Detection
The script compares short-term vs. long-term average candle ranges. If the short-term range drops below a multiple of the long-term range, the market is considered to be in a compression phase.

Breakout Confirmation
A breakout is confirmed when a candle following compression:

Has a strong body-to-range ratio (indicating conviction)

Closes beyond the fast EMA in the direction of the trend

Matches the trend structure via EMA alignment (e.g., fast EMA above slow EMA for bullish)

Expands beyond prior compression with a larger range than average (range burst)

Persistent Bias Activation
Once a breakout condition is met, a directional bias is activated and remains in place until the opposite conditions are met. This bias is not time-based or temporary—it persists to reflect the sustained direction of momentum.

📊 How the Lines Work
The indicator plots three dynamic lines:

Upper Band
This is based on a smoothed average of recent highs (SMA) with an added buffer that scales based on current price and ATR. It expands during periods of rising volatility and directional bias.

Lower Band
Similar to the upper band, it’s calculated using a smoothed average of recent lows with a volatility-based buffer subtracted. Both bands adjust dynamically as the market moves.

Band Coloration
When a bullish breakout is confirmed, both bands turn green, signaling directional momentum to the upside.
When a bearish breakout is confirmed, both bands turn red, signaling directional momentum to the downside.
If no valid breakout is detected, the bands are not colored.

These bands do not represent support/resistance zones, but rather volatility-adjusted boundaries that visually reflect the flow of momentum after a confirmed breakout. They help traders stay aligned with trend conditions during and after compression events.

🧠 What Makes It Unique
Unlike typical compression indicators that only highlight low volatility or squeeze zones, this tool:

Combines compression logic with real breakout filters based on body structure, trend alignment, and volatility surge

Displays dynamic visual feedback through expanding bands and color-coded bias

Keeps bias persistent and relevant, only changing when market momentum reverses

Uses volatility-aware buffers to adjust line positioning across any instrument or timeframe

It’s not just about detecting compression—it shows what happens after compression, with direction and context.

✅ How to Use It
Add the indicator to any chart (ideal for 5m–1h timeframes)

Wait for the bands to change color:

Green bands = bullish breakout bias

Red bands = bearish breakout bias

Use this directional flow as a trend filter alongside your own entry triggers

Avoid trading against the band color unless confirmed reversal logic is in play

The higher the Input Multiplier, the more relaxed the compression filter (catching broader breakout phases)

This tool is best used as a contextual visual overlay to identify moments when breakout moves are likely to follow sustained momentum—not just volatility.