A Bollinger Band squeeze is a condition on a price chart in which the two outer lines of the Bollinger Bands move unusually close together. The bands are drawn a set number of standard deviations, normally two, above and below a moving average, normally of 20 periods. Because their width depends on the standard deviation of recent prices, narrow bands mean that volatility has fallen. Traders usually define a squeeze as band width at its lowest level for several months.
The idea behind watching for a squeeze is that volatility moves in cycles: quiet periods tend to be followed by active ones. A squeeze is therefore treated as a warning that a larger move may be near, and it is a common setup in breakout trading. It says nothing about direction. Traders wait for the price to close outside a band, often with rising volume, and accept that the first move can be a fakeout that reverses.