Volume Crop ━ Hidden Volume Divergence
Jan 4, 2023
The Volume Crop ━ Hidden Volume Divergence indicator identifies potential trend continuation opportunities by detecting hidden volume divergence signals filtered through a specialized midline tool. It utilizes volume-based MACD calculations to highlight shifts in market participation that may precede price movements.
Usage
This tool is primarily used to spot hidden divergences within volume data, which often signal that a prevailing trend is likely to continue. Unlike standard price-based oscillators, this script processes volume to find discrepancies between market activity and trend direction.
The indicator displays bullish and bearish signals on the chart:
- Bullish Signals: Appear below the bars when hidden bullish volume divergence is detected.
- Bearish Signals: Appear above the bars when hidden bearish volume divergence is detected.
The signals are filtered by the "Midline Tool," which ensures that only the first sign of divergence after crossing a specific volume threshold is displayed. This helps in reducing noise and avoiding "false positive" signals commonly found in oscillating indicators. Users can also utilize the multi-timeframe functionality to view volume divergence from higher timeframes on their current chart.
Details
The script adapts the concept of "Hidden Price Divergence" but applies it specifically to volume data. It calculates a Volume MACD by subtracting a long-term EMA from a short-term EMA of the volume. A Simple Moving Average (SMA) is then used as a signal line.
The core logic revolves around the "Midline Tool," a custom filter developed to isolate significant crossovers. By requiring a crossover and subsequent crossunder of the midline before a signal is valid, the indicator focuses on volume shifts that have sufficient magnitude to potentially impact the price trend.
Settings
General
- Chart Timeframe: When enabled, the indicator uses the current chart timeframe. If disabled, it uses the timeframes specified in the multi-timeframe inputs.
- Multiple Timeframes (Red/Blue Books): Allows the selection of specific timeframes for bearish and bullish detection.
- Detect (Shorts/Longs): Toggles the visibility of bearish (Shorts) and bullish (Longs) signals.
- Dots & Arrow Lengths: Customizes the visual representation of the signals, including color and the length of the arrow stem.
MACD & Divergence
- MACD Bearish/Bullish (Short/Long EMA): Adjusts the periods for the fast and slow volume EMAs used to calculate the volume oscillator.
- Hidden Divergence Length: Sets the length of the SMA used as the signal line for detecting crossovers.
Midline Tool
- Midline Tool (Bearish/Bullish): Adjusts the volume threshold level. Changing this value alters where the inclusion spots for signals occur based on the volume magnitude.
FAQ
How do I use the Midline Tool setting?
The Midline Tool setting acts as a threshold for volume intensity. If you are seeing too many signals, increasing the absolute value of the midline can help filter for only the most significant volume spikes.
Can I use this on any timeframe?
Yes, the indicator is designed to work across various timeframes. You can either use it on your current chart or use the Multi-Timeframe settings to see higher timeframe volume divergences.
How do I access Volume Crop ━ Hidden Volume Divergence?
You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
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