I get this sharp and loud squeaky sound when I shift my finger up and down the fretboard while playing the acoustic. It is quite annoying. I think I have applied too much pressure on the string but if I don't, I can't sound the string. How to rectify the unwanted noise ?
We all get the string squeak. It's a natural artifact of playing acoustic guitar. Here is a little tune I worked up and the squeak cannot be avoided.

"Your sound is in your hands as much as anything. It's the way you pick, and the way you hold the guitar, more than it is the amp or the guitar you use." -- Stevie Ray Vaughan

"Anybody can play. The note is only 20 percent. The attitude of the motherfucker who plays it is 80 percent." -- Miles Davis

Guthrie on tone: https://www.youtube.com/watch?v=zmohdG9lLqY
Quote by Stuck_nomore
I wish I can play like that !

Don't we all? I consider Tommy Emmanuel a virtuoso. Anyway, if you listen to any of his other material, you'll hear string squeaks throughout. When I used to play acoustic guitar I often worried about it, but now I realize it's just part of playing acoustic guitar, and even electric to a certain extent. You can even use it to great effect in some cases. Don't worry about it.
sometimes I think it makes some songs sound better.

in Creep by Radio head I think it makes the chord progression sound better

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I agree that sometimes it makes the songs sound better. I remember the band Days of the New (Maybe they're still around but they were a grunge type band that played all acoustic guitars in strange tunings) and they had those scratches all over the album. It really worked with the sound.