The Volume Divergence Indicator is a powerful tool that can help traders identify potential price reversals in the market by analyzing volume data. The indicator has several features, including divergences signals, volume spikes, volume contractions, and volume trend signals.
Unlike most divergence indicators, this one is focused on providing non-repainting alerts. That is why I chose not to use pivot points.
The Volume Divergence Indicator can be used as an overlay or a non-overlay. The overlay mode displays the indicator on top of the price chart, while the non-overlay mode displays the indicator below the price chart.
The indicator has five alerts that can be used to generate alerts:
Bullish Divergence: This alert is generated when prices are making lower lows, but volume is making higher lows. This suggests that the selling pressure is weakening, and a bullish reversal may be imminent.
Bearish Divergence: This alert is generated when prices are making higher highs, but volume is making lower highs. This suggests that the buying pressure is weakening, and a bearish reversal may be imminent.
Volume Spike: This alert is generated when volume spikes above a certain threshold, such as two standard deviations above the moving average. This suggests that there is unusual buying or selling activity in the market, and traders may want to pay attention to the price movements that follow.
Volume Contraction: This alert is generated when volume contracts to a certain level, such as two standard deviations below the moving average. This suggests that there is little buying or selling activity in the market, and traders may want to be cautious until volume picks up again.
Volume Trend: This alert is generated when volume trends above or below the moving average for a certain number of periods, such as five or ten. This suggests that there is a sustained increase or decrease in buying or selling pressure, and traders may want to adjust their trading strategy accordingly.
To customize the indicator settings, users can adjust the following inputs:
Choose overlay mode: select either Overlay or Non-Overlay
Price and volume lookback: set the number of bars to look back for price and volume data
Bull and bear sensitivity: adjust the sensitivity of the bullish and bearish divergences
Volume MA length: set the length of the moving average used to calculate volume spikes and contractions
Sensitivity of spikes: adjust the sensitivity of the volume spikes
Sensitivity of contractions: adjust the sensitivity of the volume contractions
Trend sensitivity: set the number of periods to identify the volume trend
The Volume Divergence Indicator can be a valuable addition to any trader's toolkit. It can help traders identify potential price reversals in the market, as well as unusual buying or selling activity.
I am open to suggestions for further updates or additions.
can this one fit on using lower time frame such as 5 or 15 mins time farme please ?
cyatophilum
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@lukricky, yes, increase the lookback and sensitivity settings to remove noisy signals and increase the strength of signals.
DeDe1235
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Thanks for this wonderful indicator. How can I also get access to the bottom volume indicator?
cyatophilum
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@DeDe1235, simply add the indicator another time, click "move it to new pane below" and set the overlay mode to "Non overlay" in the indicator settings!
CoffeeshopCrypto
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Great work. I haven't tested it enough yet but i like its potential. I say Potential because many of the parts are based on "study" and can be subjective. i do think there is a few missing parts to this indicator which could really detail nicely.
All that being said. i think this is a more accurate description and breakdown of the indicator itself.
This TradingView Pine Script version 5 code is an indicator called "Volume Divergence Indicator." It attempts to identify various patterns and signals related to volume divergences, spikes, contractions, and trends in a financial market.
Let's break down the different parts of the code and their intended purpose:
Inputs:
displayMode: Allows the user to choose between overlay and non-overlay mode. overlay: Determines if the indicator should be overlaid on the chart or not. priceLookBack: Defines the lookback period for price and volume calculations. bullSensitivity and bearSensitivity: Control the sensitivity of detecting bull and bear divergences. Algorithm:
Bullish Divergence: Identifies a potential bullish reversal when prices make lower lows but volume makes higher lows. Bearish Divergence: Identifies a potential bearish reversal when prices make higher highs but volume makes lower highs. Volume Spike: Detects a volume spike above a certain threshold, indicating unusual buying or selling activity. Volume Contraction: Identifies a volume contraction when volume drops below a certain level, suggesting low activity. Volume Trend: Tracks sustained increases or decreases in buying or selling pressure over a specified period. Rendering:
plotshape: Plots shapes and labels on the chart to indicate bullish and bearish divergences. plotchar: Plots specific characters to represent volume spikes and contractions. plot: Plots the volume with different colors based on the detected signals. fill: Fills the area between the volume moving average and the upper/lower standard deviation bands. Alerts:
alertcondition: Sets up alert conditions for various signals, such as bullish/bearish divergences, volume spikes, volume contractions, and increasing/decreasing volume trends. Overall, this indicator aims to provide visual and alert-based signals to help traders identify potential trading opportunities based on volume divergences, spikes, contractions, and trends.
tradinganalysis10
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Great indicator ! Great work ! Thank you for sharing !