Prox Cumulative Vol Delta BB

The Prox Cumulative Vol Delta BB indicator provides an approximation of Cumulative Volume Delta (CVD) combined with Bollinger Bands to identify volume-driven trend strength and potential exhaustion points.

Usage

The Usage section describes how the script can be used to analyze market sentiment and volume flow. Unlike standard On-Balance Volume (OBV), this tool accounts for intra-candle price action to estimate the force of buyers and sellers.

• Trend Confirmation: When the Cumulative Delta is trending upwards and staying within the Bollinger Bands, it suggests healthy buying pressure.
• Divergence Analysis: One of the most effective ways to use this tool is by looking for divergences between price and the Cumulative Delta. If price reaches a new high but the Cumulative Delta fails to do so, it may indicate weakening momentum.
• Bollinger Band Mean Reversion: The integrated Bollinger Bands allow users to see when volume delta is overextended. A touch or cross of the upper or lower bands can signal areas where the current volume trend might be due for a pause or reversal.

Details

The indicator approximates "upward" and "downward" forces by analyzing the relationship between the candle's High, Low, Open, and Close.

• For "Buy" candles, the upward force is primarily derived from the High-Low range.
• The downward force is calculated as (High-Close) + (Open-Low).
• The volume of each candle is then allocated proportionally based on these forces to calculate the Delta.

The cumulative sum of these values is plotted either as candles or a line. The Bollinger Bands are applied to this cumulative data to provide a statistical context for the volume flow, helping traders distinguish between normal fluctuations and significant volume surges.

Settings

• Line graph: Toggles the display between a candle-based Cumulative Delta and a simple line graph.
• Bollinger Length: Sets the period for the Simple Moving Average (basis) and the Standard Deviation calculation.
• Bollinger Deviation: Adjusts the multiplier for the Standard Deviation to widen or narrow the bands.
• Show Bollinger: Toggles the visibility of the Bollinger Band basis and envelopes.

FAQ

How do I access the Prox Cumulative Vol Delta BB?

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

How does this differ from standard OBV?

While OBV assigns the entire candle volume to a single direction based on the close, this indicator uses the "force" calculation to split the volume, providing a more granular view of intra-candle activity.

Can I use this for spotting reversals?

Yes, reversals are often spotted when the Cumulative Delta crosses outside the Bollinger Bands and then returns, or when there is a clear divergence between the volume trend and price trend.