Body & Volume-Based Buy/Sell Signals (5min 1.5M Vol)

The Body & Volume-Based Buy/Sell Signals indicator is a momentum-based tool designed to identify potential reversals by analyzing candle body size and volume thresholds.

Usage

The Usage section focuses on identifying price reversals through specific candle interactions. This tool is optimized for the 5-minute timeframe and monitors for two specific scenarios:

• Bullish Reversal (BUY): Triggered when a green candle follows a red candle, provided the green candle has a larger body than the previous red candle and both meet the minimum volume and body size requirements.
• Bearish Reversal (SELL): Triggered when a red candle follows a green candle, provided the red candle has a larger body than the previous green candle and both meet the minimum volume and body size requirements.

Users can apply this script to high-volume assets to filter out market noise and focus on significant momentum shifts.

Details

The script evaluates the relative strength of price action by comparing the "Body Size" (absolute difference between open and close) of consecutive bars. A signal is only generated if the current candle "engulfs" the previous candle's body size, indicating an increase in directional pressure. Additionally, the volume filter ensures that these signals are backed by significant market participation, reducing the likelihood of false signals during low-liquidity periods.

Settings

• Minimum Volume: Sets the threshold for the required trading volume on both the current and previous candles. Signals will only appear if both bars exceed this value.
• Minimum Body Size (Points): Defines the minimum point value the previous candle's body must reach for a signal to be valid. This ensures the preceding move had enough substance to be considered a reversal.

FAQ

On which timeframe should I use this indicator?

While it can be used on various timeframes, it is specifically optimized for the 5-minute chart with high-volume assets.

How do I interpret the BUY and SELL labels?

A BUY label suggests a bullish momentum shift after a bearish candle, while a SELL label suggests a bearish shift after a bullish candle, both confirmed by volume.

How can I access Body & Volume-Based Buy/Sell Signals?

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