Relative Volume Suite [QuantAlgo]

🟢 Overview

The Relative Volume Suite is a comprehensive volume analysis system that combines normalized volume measurements with statistical anomaly detection to identify and track significant trading activity deviations from established baselines. The indicator employs a dual-mode visualization approach by offering both relative volume (RVOL) histogram display for standard volume screening and cumulative directional RVOL candlesticks for tracking sustained volume momentum patterns. Through statistical analysis using moving averages and standard deviation, the system identifies volume anomalies that deviate from normal market behavior, flagging potential institutional activity, breakout confirmations, and accumulation/distribution patterns. This quantitative framework provides traders with a systematic methodology for volume regime identification, anomaly detection across raw or normalized volume data, and dynamic threshold-based screening across diverse market conditions and trading timeframes.

🟢 How It Works

The indicator calculates relative volume (RVOL) by dividing current bar volume by its simple moving average over a user-defined lookback period, producing a normalized ratio where values above 1.0 indicate higher-than-average volume and values below 1.0 represent lower-than-average activity. This normalization enables direct comparison of volume significance across different securities and time periods, eliminating the need to assess absolute volume numbers which vary dramatically between instruments.

The system also constructs a cumulative directional volume metric by calculating a running sum of relative volume, where up bars (close > open) contribute positive RVOL values and down bars contribute negative values. This cumulative calculation tracks the persistent alignment of volume with price direction over time, creating a momentum pathway that reveals sustained buying or selling pressure patterns.

The anomaly detection system operates through statistical analysis to flag unusual volume events. The system calculates a moving average baseline of the selected source using user-defined MA types over the anomaly MA length period, while simultaneously measuring standard deviation over the anomaly standard deviation length period. When the source data deviates from its moving average by more than one standard deviation, the indicator flags an anomaly, highlighting the bar with distinct coloring to draw attention to statistically significant volume events that fall outside normal market behavior patterns.

🟢 How to Use It

▶ Anomaly Detection: Anomaly-flagged bars appear in bright, attention-grabbing colors distinct from normal volume bars. Green anomalies on up bars highlight unusual buying volume that exceeds statistical norms, potentially signaling institutional accumulation, breakout confirmation, or reversal capitulation. Red anomalies on down bars reveal unusual selling volume, flagging potential distribution, breakdown validation, or panic selling events. The anomaly system acts as a filter, automatically screening thousands of bars to surface statistically significant volume events that may warrant detailed analysis.

Configure the anomaly detection parameters based on your trading style and timeframe. Lower Anomaly MA Length creates responsive anomaly detection that catches emerging volume regime changes quickly but may flag more normal variations. Higher Anomaly MA Length requires stronger evidence, detecting only major structural volume shifts with fewer false positives. The Anomaly StdDev Length controls sensitivity: lower values flag smaller deviations as anomalies for aggressive short-term trading, while higher values require extreme statistical significance for conservative longer-term analysis. For day trading, use shorter parameters to catch intraday volume spikes. For swing trading, use balanced settings. For position trading, use longer parameters to filter noise and identify only major volume events.

▶ Display Mode Selection: Choose Relative Volume mode for standard volume analysis and screening applications. In this mode, the histogram bars show when current volume exceeds average levels, with the threshold line providing visual reference for screening setups. Bars extending above the threshold line indicate potentially elevated volume worthy of attention. Use this mode when scanning multiple securities for volume breakouts, confirming price breakout validity, or identifying potential reversal points marked by volume climaxes.

Switch to Cumulative RVOL mode when tracking volume momentum and accumulation/distribution patterns over time. The candlestick visualization reveals whether volume is consistently supporting the prevailing price trend. Rising cumulative RVOL during an uptrend suggests buying pressure may be fueling the advance, while rising cumulative RVOL during a downtrend (or falling during uptrend) signals potential divergence where volume momentum opposes price direction, often a warning sign of weakening trend integrity. The zero line serves as the neutral reference point, with movement away from zero indicating building directional volume momentum.

▶ Trading Applications: Consider combining anomaly volume signals with other technical indicators for confluence-based trade decisions. For example, when anomaly volume appears on up bars near key support levels defined by moving averages or VWAP, this confluence of volume confirmation with technical structure may strengthen the case for long entries. Similarly, anomaly volume at resistance levels identified through pivot points or Fibonacci retracements could suggest potential reversal zones worth monitoring.

For breakout trading, look for elevated RVOL (above threshold) combined with anomaly detection when price breaks through significant levels like prior day highs, consolidation ranges, or moving average clusters. The presence of unusual volume alongside technical breakouts may indicate institutional participation validating the move. Conversely, breakouts occurring without corresponding volume anomalies might suggest lower conviction moves more susceptible to failure.

In trend-following strategies, use the indicator alongside directional tools like moving average crossovers or trend channels. Anomaly volume appearing in the direction of the established trend (buying anomalies during uptrends, selling anomalies during downtrends) could suggest continuation potential, while counter-trend anomalies may signal weakening momentum or potential reversals requiring closer monitoring.

Monitor the bar coloring feature which overlays volume-based colors directly onto price candles. This provides continuous visual feedback on whether current bars represent normal or anomalous volume conditions without needing to reference the separate volume pane. Consecutive anomaly-colored bars indicate sustained unusual activity, often preceding or confirming significant price moves.

▶ Alert Configuration: The indicator provides six distinct alert types for comprehensive volume monitoring. "RVOL Threshold Crossed" triggers when relative volume exceeds your defined threshold multiplier, useful for screening high-volume breakout candidates across multiple watchlists. "Volume Anomaly - Buying" and "Volume Anomaly - Selling" fire specifically when the statistical anomaly system detects directional unusual volume, enabling you to monitor institutional activity as it emerges. "Extreme Volume Spike" alerts when volume reaches significantly above the standard threshold, flagging only the most dramatic volume events like earnings releases, news events, or climactic reversals. "High Volume Buying" and "High Volume Selling" combine threshold crossing with directional confirmation, providing alerts that integrate both magnitude and direction of volume pressure.

▶ Visual Customization: The indicator offers six color presets (Classic, Aqua, Cosmic, Ember, Neon, Custom) optimized for different chart themes. Classic uses traditional green/red for universal compatibility, while Aqua, Cosmic, Ember, and Neon provide high-contrast alternatives for dark themes and personal preferences. Custom mode allows complete color control for matching corporate branding or specific visual requirements. The distinction between normal volume colors (neutral grays) and anomaly colors (bright attention-grabbing hues) helps statistically significant events stand out against baseline volume activity, supporting visual pattern recognition across multiple charts and timeframes.