Weis Wave Volume

The Weis Wave Volume indicator provides a cumulative volume measurement based on price waves to help traders identify the strength behind market movements and potential exhaustion points. By aggregating volume into distinct upward and downward waves using a Renko-style zig-zag logic, it offers a clear view of supply and demand imbalances as popularized by David H. Weis.

Usage

The Usage section describes how the script can be used to interpret market momentum through volume aggregation. The indicator groups volume into "waves" that continue as long as price moves in a specific direction based on the defined sensitivity.

• Identifying Trend Strength: A rising trend accompanied by increasing wave volume suggests strong buying pressure. Conversely, if price makes a new high but the Weis Wave Volume shows a smaller peak than the previous wave, it may indicate a "buying climax" or waning demand.
• Volume Reversals: When the wave color changes (e.g., from green to red), it signals that a price reversal has met the criteria of the Renko assignment method, marking the start of a new cumulative volume count for the opposing direction.
• Handling Non-Volume Assets: For instruments like Forex or certain indices that lack centralized volume data, the tool can be set to use the True Range as a proxy for activity, allowing the same wave logic to be applied.

Details

The script is a modern adaptation of Richard D. Wyckoff’s Wave Charts, specifically following the implementation described in David H. Weis's book, Trades About to Happen.

The core logic utilizes a zig-zag pattern similar to Renko bricks to determine when a wave starts and ends. Unlike standard time-based volume histograms, this indicator is "price-action dependent." A wave only terminates when price moves against the current direction by a specified threshold (the "Value"). This helps filter out market noise and focuses on significant capital flows.

The tool supports three different brick calculation methods:

1. ATR: Uses Average True Range to dynamically adjust wave sensitivity based on volatility.
2. Traditional: Uses a fixed absolute price value for the wave reversal threshold.
3. Part of Price: Calculates the threshold as a fraction of the current price, making it adaptive to significant price changes over time.

Settings

General Settings

• Renko Assignment Method: Determines how the price threshold for a wave reversal is calculated (ATR, Traditional, or Part of Price).
• Value: The numerical input used by the assignment method (e.g., the ATR length or the fixed brick size).
• Price Source: Selects which price points are used to calculate the zig-zag movement (Close, Open/Close, or High/Low).
• Use True Range instead of Volume: Controls whether the script uses standard volume or the True Range. "Auto" will detect if volume data is available.
• Oscillating: When enabled, downward waves are plotted as negative values below the zero line, creating an oscillator view.
• Normalize: When enabled, divides the cumulative volume by the number of bars in the wave to provide an average volume per bar within that wave.

FAQ

How do I interpret a divergence in Weis Wave Volume? A divergence occurs when the price reaches a new high or low, but the corresponding Weis Wave Volume peak is lower than the previous one, suggesting that the move is losing participation and may reverse.

What is the difference between "Traditional" and "ATR" methods? The Traditional method uses a static price move to trigger a new wave, while the ATR method adjusts the required price move based on recent market volatility.

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.