Sell / Buy Rates

The Sell / Buy Rates indicator measures the balance between buying and selling power by analyzing candle-level volume distribution and applying linear regression to identify potential trend reversals and divergences.

Usage

The Usage section describes how the script can be used to interpret market momentum and exhaustion. Traders typically use this tool to gauge whether bulls or bears are in control of the current price action.

• Trend Reversal Identification: When the columns cross the zero line, it indicates a shift in market control. A cross above zero suggests buying power is overtaking selling power, while a cross below zero suggests the opposite.
• Momentum Strength: The color-coded columns indicate the strength of the move. Solid green or red columns represent strengthening trends, while faded colors indicate a potential slowdown or weakening in the current buying or selling rate.
• Divergence Trading: This indicator is highly effective for spotting divergences. If price makes a higher high while the Sell / Buy Rates indicator makes a lower high, it may signal a bearish reversal. Conversely, a higher low on the indicator while price makes a lower low may signal a bullish reversal.

Details

The Sell / Buy Rates indicator operates by decomposing each candle into its components: the top wick, the bottom wick, and the body. It then applies a proprietary logic to distribute the total volume of that bar into "Buy Volume" and "Sell Volume" based on where the price action occurred within the candle's range.

Once the buying and selling volumes are estimated, the script calculates the difference between them. To smooth out noise and provide a more predictive outlook, a linear regression is applied to this difference over a user-defined period. This smoothed value, known as the "Rate Diff," is what is plotted on the chart. Linear regression is used here as a predictive analytical tool to project the current trajectory of buying or selling pressure. This script is a refactored version of the original concept by @LonesomeTheBlue.

Settings

• Period: Determines the lookback length for the linear regression calculation. Lower values make the indicator more sensitive to short-term fluctuations, while higher values (such as the default 34) provide a smoother, trend-following output.

FAQ

How do I interpret the faded colors on the columns?

The faded colors indicate a momentum shift within the current trend. For example, a faded green column means the rate is still positive (above zero) but has started to fall compared to previous bars, signaling a potential loss in buying pressure.

Can this indicator be used on any timeframe?

Yes, the Sell / Buy Rates indicator can be applied to any timeframe. However, it is most commonly used on intraday or daily charts to identify exhaustion points in volume.

How can I get access to Sell / Buy Rates?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.