High Volume Zones with Signals – HVZ

The High Volume Zones with Signals – HVZ indicator identifies institutional liquidity areas by highlighting candles with significant volume spikes and drawing them as customizable zones. This tool is designed to help traders recognize key supply/demand levels, potential consolidation areas, and trend continuation signals based on volume-driven price action.

Usage

The Usage section describes how to interpret the visual outputs and signals provided by the indicator.

• High Volume Zones (HVZ): These boxes represent areas where institutional activity was concentrated. Price often returns to these levels to "refresh" liquidity. Unfilled zones act as magnets for future price action.
• Break Signals (Triangles): A Break Up (green triangle) occurs when a bearish HVZ is broken upward, while a Break Down (red triangle) occurs when a bullish HVZ is broken downward. These typically signal a continuation of the new momentum.
• Exit Signals (Circles): These appear when price leaves a zone without a full breakout, potentially signaling the end of a correction or a local reversal.
• 50% Midline: The dashed line in the center of the zone provides a specific target for partial profit-taking or a secondary reaction point within the zone.

Details

The indicator calculates volume significance using a Simple Moving Average (SMA). A zone is created when a candle's volume exceeds the average volume by a user-defined multiplier.

Additionally, an ATR filter detects exceptionally large candles. These "climax" candles often signify market capitulation or panic. Depending on the settings, the indicator can treat these as normal zones, skip them entirely, or mark them with a separate color (defaulting to gray) to indicate a high probability of upcoming consolidation.

Settings

The settings are categorized to allow for deep customization of both logic and aesthetics:

Volume Filter

• Volume SMA Length: The lookback period used to calculate the average volume.
• Volume Multiplier: The threshold for HVZ detection (e.g., 2.0 means volume must be double the average).

ATR Filter

• Enable ATR Filter: Toggles the detection of large candles.
• ATR Multiplier: Sets the sensitivity for what constitutes a "large" candle relative to current volatility.
• Action for large candles: Choose between skipping the zone, using a separate color, or treating it as a normal HVZ.

Style and Signals

• Box Style: Adjust transparency for the background and midlines.
• Bull/Bear Box Style: Customize border colors, widths, and gradient fills for bullish and bearish zones.
• Signal Settings: Choose to display Break signals, Exit signals, or both, and customize their respective colors.

FAQ

How do I use the HVZ indicator for breakouts?

Lower the Volume Multiplier (e.g., to 1.5) to generate more frequent signals in trending markets. Ensure you are trading in the direction of the prevailing trend for higher probability setups.

Why are some zones colored gray?

By default, the ATR filter marks exceptionally large candles in gray. These represent potential capitulation or consolidation zones where price might stall before making its next move.

How can I access this tool?

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