Volume Price Trend with Divergence and Pivot Points

The Volume Price Trend with Divergence and Pivot Points indicator provides a specialized oscillator version of the Volume Price Trend (VPT) to help traders identify the balance between supply and demand while highlighting potential trend reversals through divergences and pivot points. By calculating the difference between short-term and long-term VPT moving averages, this tool transforms standard cumulative volume data into a momentum-based oscillator that can lead price action.

Usage

The Usage section focuses on interpreting the oscillator's movements and the automated signals displayed on the chart.

• VPT Oscillator: When the oscillator is above zero and rising, it indicates strong positive money flow. Conversely, a declining oscillator below zero suggests selling pressure.
• Divergences: The indicator automatically identifies four types of divergences:
  • Regular Bullish (Green Circle): Occurs when price makes a lower low but the VPT makes a higher low, suggesting a potential bullish reversal.
  • Regular Bearish (Red Circle): Occurs when price makes a higher high but the VPT makes a lower high, suggesting a potential bearish reversal.
  • Hidden Bullish (Aqua Circle): Occurs when price makes a higher low but the VPT makes a lower low, suggesting trend continuation.
  • Hidden Bearish (Orange Circle): Occurs when price makes a lower high but the VPT makes a higher high, suggesting trend continuation.
• Pivot Points (Triangles): These mark structural turning points in the oscillator's momentum. A triangle pointing down represents a local peak in VPT, while a triangle pointing up represents a local trough. These often precede similar turns in price action.

Details

The script calculates the Volume Price Trend (PVT) and applies an Exponential Moving Average (EMA) crossover logic to create the oscillator. The formula used is: EMA(VPT, short) - EMA(VPT, long).

Unlike lagging indicators like simple moving averages, the VPT oscillator functions as a leading indicator by measuring the force behind price movements. If the price continues to rise while the VPT oscillator declines, it signals that the trend is losing strength (volume support), which often occurs before a price peak.

Settings

Main Settings

• Source: The price source used for calculations (default is Close).
• Short VPT period: The fast EMA period for the oscillator calculation.
• Long VPT period: The slow EMA period for the oscillator calculation.

Pivot & Divergence Lookbacks

• VPT Wave Pivot Lookback (Right/Left): Sets the number of bars to the right and left required to confirm an oscillator pivot point.
• Divergence Pivot Lookback (Right/Left): Determines the sensitivity of the divergence detection by setting the required bars for price/oscillator pivots.
• Max/Min of Lookback Range: Defines the bar range window within which the indicator searches for divergent points.

Visibility

• Plot Bullish/Hidden Bullish: Toggles the visibility of bullish divergence signals.
• Plot Bearish/Hidden Bearish: Toggles the visibility of bearish divergence signals.

FAQ

How do I interpret the zero-line crossovers? A crossover above the zero line typically indicates a shift toward bullish momentum, while a crossunder indicates a shift toward bearish momentum.

Can this indicator be used on any timeframe? Yes, the Volume Price Trend with Divergence and Pivot Points can be applied to any timeframe, though it is most effective when paired with trendlines or support/resistance levels for confirmation.

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