CVD Divergence & Volume Profile

The CVD Divergence & Volume Profile indicator identifies high-probability trading opportunities by detecting Cumulative Volume Delta (CVD) divergences occurring near significant Volume Profile levels. This tool integrates volume-based momentum shifts with key support and resistance zones to pinpoint potential trend reversals or continuations.

Usage

The Usage section describes how the script can be used to identify market imbalances. The indicator plots signals directly on the chart when specific conditions are met.

CVD Divergence

CVD measures the cumulative difference between buying and selling volume. The tool looks for two specific types of divergence:

• Bullish Divergence: The price reaches a lower low while CVD shows a higher low (or fails to make a new low), suggesting selling pressure is exhausted. This is marked by a green upward-pointing triangle.
• Bearish Divergence: The price reaches a higher high while CVD shows a lower high (or fails to make a new high), suggesting buying pressure is weakening. This is marked by a red downward-pointing triangle.

Volume Profile Zones

To filter out low-probability signals, the indicator calculates simplified Volume Profile levels over a specific lookback period:

• Value Area High (VAH): The upper boundary of the primary trading area (Orange line).
• Value Area Low (VAL): The lower boundary of the primary trading area (Green line).
• Point of Control (POC): The price level with the highest volume (Blue line).

Divergence signals are only triggered if the price is within a user-defined percentage threshold of these levels, ensuring trades are taken near established zones of liquidity and institutional interest.

Trend Filter

Users can toggle a Simple Moving Average (SMA) filter to ensure signals align with the broader market context. When enabled, bullish signals are only shown if the price is above the SMA, and bearish signals are only shown if the price is below the SMA.

Details

The script calculates CVD by accumulating the delta (Volume * (Close - Open)) for each bar. The Volume Profile levels are simplified based on the highest high, lowest low, and the price of the highest volume bar within the specified range. The divergence logic compares the current price and CVD extremes against the highest/lowest values found within the divergence lookback window.

Settings

CVD/VP/Settings

• Volume Profile Range (Candles): Sets the number of bars used to calculate VAH, VAL, and POC.
• Nähe zu VAH/VAL/POC (%): The percentage threshold that defines the proximity zone around Volume Profile levels.
• CVD Divergenz Lookback (Candles): The window used to identify historical price and CVD peaks/troughs for divergence detection.
• Trend-Filter (SMA): Toggles the SMA trend filter on or off.
• SMA Periode: Defines the lookback period for the Simple Moving Average.

FAQ

How can I use the Volume Profile levels as targets?

Traders often use the opposite side of the Value Area as a target. For example, a long entry at the VAL (Value Area Low) might have a take-profit target at the POC or VAH.

Why do some divergences not show a signal?

A divergence signal will only appear if the price is also within the proximity threshold of a VAH, VAL, or POC line. If the trend filter is enabled, the price must also be on the correct side of the SMA.

How do I get access to CVD Divergence & Volume Profile?

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