Volume Profile and Volume Indicator by DGT

The Volume Profile and Volume Indicator by DGT indicator provides a comprehensive suite of volume analysis tools designed to identify institutional interest, support/resistance levels, and market sentiment. It integrates a horizontal volume profile, sentiment distribution, and a volume-weighted histogram to help traders visualize the relationship between price and participation.

Usage

The Usage section describes how the script can be used to interpret market structure. Traders can utilize the horizontal volume profile to identify "Value Areas" where the majority of trading occurred, or "Profile Gaps" where liquidity is sparse.

• Volume Profile: Displays total trading activity at specific price levels. High-volume nodes (HVN) often act as magnets or consolidation zones, while low-volume nodes (LVN) represent areas price may move through quickly.
• Sentiment Profile: Classifies volume into buying or selling pressure at each price level, allowing users to see which side was dominant within a specific range.
• Supply & Demand Zones: Automatically highlights potential reversal areas based on volume distribution and structural thresholds.
• Volume Histogram: Provides a vertical representation of bar-by-bar volume with an optional moving average to detect spikes in activity relative to the mean.

Details

The script utilizes a dynamic "Smart LTF" logic to improve the accuracy of volume distribution by selecting appropriate lower timeframes for calculation. It offers two range modes: "Fixed Range," which analyzes a set number of historical bars, and "Visible Range," which updates dynamically based on the user's current chart view.

The "Profile Gaps" feature detects structural breaks in volume distribution, identifying transition zones where activity drops significantly. This helps in spotting key structural boundaries that traditional price-based analysis might miss.

Settings

Volume & Sentiment Profile

• Volume Profile: Toggles the visibility of the horizontal volume histogram.
• Sentiment Profile: Enables the display of dominant buying vs. selling activity at each price node.
• Supply & Demand Zones: Highlights price areas derived from volume clusters where pressure may emerge.
• Volume Profile Gaps: Detects structural "voids" between volume nodes based on the Node Detection % sensitivity.
• Point of Control: Options to show the "Developing POC" (the price level with the highest volume over time) or just the final level.
• Value Area (%): Defines the percentage of total volume used to calculate the Value Area (default is 68%).
• Profile Lookback Range: Switches between a "Fixed" number of bars or the "Visible" chart range.
• Profile Number of Rows: Adjusts the vertical granularity of the profile.

Volume Histogram

• Volume Histogram: Toggles the vertical bar volume display.
• Volume MA: Adds a moving average line to the volume histogram to identify relative strength.
• Placement: Positions the histogram at the top or bottom of the pane.

Volume-Weighted Bar Coloring

• Volume-Weighted Bar Coloring: Changes candle colors based on whether their volume exceeds the Upper or Lower Threshold relative to the average.

FAQ

How do I identify the strongest support levels using this tool? Look for high-volume nodes (long horizontal bars) in the Volume Profile. These represent price levels where significant accumulation or distribution has occurred, often acting as strong support or resistance.

What is the difference between Bar Polarity and Buying/Selling Pressure? Bar Polarity classifies volume based solely on whether the candle closed higher or lower than its open. Buying/Selling Pressure uses a more complex calculation based on the wick-to-body relationship to determine which side exerted more effort.

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.