Linear Regression Volume Profile

The Linear Regression Volume Profile indicator provides a comprehensive visualization of market trends and volume distribution by integrating a linear regression channel with a dynamic volume profile overlay. This tool helps traders identify high-interest price zones relative to the current trend direction.

Usage

The tool can be used to identify both the trend direction and the key structural levels within that trend. The linear regression channel tracks the mean price path, while the horizontal volume bars indicate where the most significant trading activity has occurred.

• Trend Identification: Use the slope of the channel and the integrated arrow label to determine the dominant market direction (upward or downward).
• Support and Resistance: High-volume nodes (longer, more intensely colored bars) act as strong areas of interest where price may consolidate or find support/resistance.
• Volume Concentration: The percentage labels allow for quick assessment of volume weight at specific levels within the channel.
• Breakout Detection: Monitor price action relative to the channel boundaries; price crossing outside the upper or lower bounds may signal a potential trend shift or exhaustion.

Details

The indicator calculates a statistically fitted linear regression line based on a user-defined period. It then projects multiple parallel levels based on the Average True Range (ATR) and a multiplier. For each level, the script iterates through historical data within the defined period to calculate the volume traded at that specific price intersection. The volume distribution is then normalized and visualized as a horizontal profile on the leading edge of the channel, using a gradient color scale to differentiate between low and high volume zones.

Settings

General

• Period: Sets the number of bars used to calculate the linear regression and volume distribution.

Levels

• Qty: Determines the number of horizontal levels drawn above and below the median regression line.
• Style: Allows selection between Solid, Dashed, or Dotted lines for the channel levels.
• Color: Sets the color for the horizontal channel levels.

Profile

• Width: Adjusts the thickness of the volume profile bars.
• Channel Size: A multiplier used to expand or contract the vertical spread of the channel levels based on ATR.
• Max/Min Color: Defines the gradient range used to represent high (Max) and low (Min) volume concentrations.

FAQ

How do I interpret the percentage labels? The percentage labels represent the share of total volume traded at that specific level relative to all other levels within the channel's lookback period.

What does the arrow in the label indicate? The floating arrow provides a quick visual reference for the slope of the linear regression: a downward arrow indicates a bearish trend, while an upward arrow indicates a bullish trend.

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