Volume Divergence Polarity Grid

The Volume Divergence Polarity Grid [DW] indicator provides a comprehensive visualization of market sentiment by analyzing volume-price divergence across 16 different lookback periods. It aims to identify the underlying trend polarity by comparing positive and negative volume divergence, helping traders spot confluence or conflict across multiple timeframes simultaneously.

Usage

The indicator is presented as a color-coded grid where each row represents a specific lookback period. Green cells indicate positive polarity (bullish volume divergence), while red cells indicate negative polarity (bearish volume divergence).

• Trend Confirmation: When the majority of the grid rows share the same color, it suggests a strong trend consensus across multiple lookbacks.
• Early Reversals: Changes in the shorter lookback periods (top of the grid) can often serve as early warnings for potential trend shifts before the longer-term periods (bottom of the grid) follow suit.
• Grid Order: The grid is structured from top to bottom, with the first lookback period at the top and the final lookback period at the base.

Details

The Volume Divergence Polarity Grid [DW] is built upon the framework of the Dual Volume Divergence Index. It calculates two distinct metrics:

1. Positive Volume Divergence (PVD): Tracks price changes during bars where volume is increasing.
2. Negative Volume Divergence (NVD): Tracks price changes during bars where volume is decreasing.

The polarity of each cell is determined by the relationship between PVD and NVD. A "Strong" color is applied when the dominant divergence is also positive (above zero), whereas a "Weak" (more transparent) color is applied when the dominant divergence is negative (below zero), providing an extra layer of conviction for each signal.

Settings

• Source: Determines the price data used for calculations (e.g., Close, Open, High, Low).
• Period 1-16: Allows customization of the 16 lookback periods. By default, these use Fibonacci-based lengths to capture a broad range of market cycles.
• Volume Type: Choose between "Default" (exchange-reported volume) or "Tick" (calculated tick volume) for assets without standard volume data.

FAQ

How do I access the Volume Divergence Polarity Grid [DW]?

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

What do the transparent colors in the grid mean?

Transparent or "weak" colors indicate that while one polarity is dominant over the other, the absolute value of that divergence is currently below zero, suggesting a less aggressive trend.

Can I change the lookback periods?

Yes, you can modify any of the 16 periods in the indicator settings to better align with your specific trading strategy or the asset's typical volatility cycles.