Volume Support/Resistance

The Volume Support/Resistance indicator identifies potential support and resistance levels based on significant surges in trading volume relative to historical averages.

Usage

The indicator can be used to identify key price levels where high-volume institutional activity or retail exhaustion might be occurring. When the trading volume of a specific bar exceeds a set threshold of standard deviations above its moving average, the script marks a new level:

• Support: Established at the low of a bullish candle (close > open) that meets the high-volume criteria.
• Resistance: Established at the high of a bearish candle (close < open) that meets the high-volume criteria.

Traders can use these levels as areas of interest for potential reversals, breakout confirmations, or stop-loss placement.

Details

The script identifies significant volume by comparing the current bar's volume to its simple moving average over a specified lookback period. A signal is triggered if: Current Volume - Average Volume > (Standard Deviation * Multiplier)

This logic ensures that only "anomalous" volume—activity that stands out significantly from the recent baseline—is used to generate price levels. By anchoring these levels to the extremes of the high-volume candle, the indicator highlights zones where significant buying or selling pressure was concentrated.

Settings

• Volume Length: Sets the lookback period (number of bars) used to calculate the average trading volume and its standard deviation.
• Std Length: The multiplier for the standard deviation. A higher value will result in fewer, more significant support and resistance levels, while a lower value will make the indicator more sensitive.

FAQ

How do I use these levels for trading?

These levels act as horizontal zones where price has previously reacted with high volume. You can look for price to bounce off these levels or observe how price reacts when it returns to them after a breakout.

Can I adjust the sensitivity of the signals?

Yes, by adjusting the "Std Length" input. Increasing this value requires a larger volume spike to trigger a new level, filtering out smaller fluctuations.

How can I access Volume Support/Resistance?

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