Volume Flow v3

The Volume Flow v3 indicator analyzes market momentum by isolating positive and negative volume data to determine trend direction and strength through moving average crossovers and breakout detection.

Usage

The Usage section describes how the script can be used to identify market shifts and volume anomalies. Traders can utilize the indicator in the following ways:

• Trend Identification: Moving average crossovers between the Bull (green) and Bear (red) lines signal potential trend changes. When the Bull MA is above the Bear MA, the market is considered to have bullish momentum.
• Volume Strength: The area cloud at the bottom represents the absolute difference between the moving averages. A growing cloud suggests strengthening volume momentum, while a shrinking cloud indicates waning conviction or a potential retracement.
• Breakout Detection: Brightly colored volume bars highlight significant volume spikes. These occur when volume exceeds the average by a specific user-defined factor, often signaling the start of a new trend or an exhaustive climax.
• Volume Distribution: Unlike standard volume bars, this tool separates volume into bullish (close > open) and bearish (open > close) components to calculate the flow, providing a more granular view of market activity.

Details

The script operates by segregating the total volume of every candle into "Bull Volume" or "Bear Volume" based on the relationship between the open and close prices. It then applies a selectable moving average (SMA, EMA, or DEMA) to these values to smooth out noise.

The "Difference Value" (the area cloud) is a normalized calculation of the spread between the two moving averages, providing a visual representation of which side of the market is currently dominant. The "Factor For Breakout Candle" (x) acts as a threshold; if current volume crosses over the average volume multiplied by this factor, it triggers a "Spike" signal, which is visually distinct and can be used for alert optimization.

Settings

• Moving Average Type: Selects the calculation method for the volume averages. Options include Simple (SMA), Exponential (EMA), and Double Exponential (DEMA) for faster responsiveness.
• MA Length: Determines the lookback period for the moving averages. Higher values result in smoother trends, while lower values are more sensitive to short-term volume shifts.
• Factor For Breakout Candle: A multiplier used to detect volume spikes. For example, a setting of 3.1 means volume must be 3.1 times higher than the average to trigger a spike signal.

FAQ

How do I interpret the colored volume spikes? Bright green or red bars represent volume that has significantly exceeded the average flow (based on your Factor setting), often indicating high institutional activity or a breakout.

What is the difference between the MA lines and the area cloud? The MA lines show the individual trajectories of buying and selling volume, while the area cloud represents the delta (difference) between them, simplifying the trend direction.

How can I access Volume Flow v3? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.