Fixed volume profile & zones

The Fixed volume profile & zones indicator plots a fixed volume profile and identifies a user-defined number of high-volume "shelves" that act as significant price reaction zones. This tool assists traders in visualizing where the most trading activity has occurred over a specific period to pinpoint potential support and resistance levels.

Usage

The Usage section describes how the script can be used to analyze market structure through volume distribution. This indicator is primarily used to identify high-volume areas (HVAs) where price is likely to consolidate or react.

Volume Profile & POC

The indicator calculates volume distribution between two specific points in time. The Point of Control (POC) represents the price level with the highest traded volume within the selected range, often serving as a magnet for price.

High-Volume Shelves (Zones)

The script automatically identifies "shelves," which are clusters of high-volume slots.

• Support & Resistance: These shelves represent zones where significant buying and selling occurred. When price returns to these areas, they often act as zones of interest.
• Zone Info: By enabling "Show info," the indicator numbers the shelves based on their volume significance, helping traders prioritize levels.
• Max Slot: A dotted line can be enabled within each shelf to mark the specific price level with the absolute highest volume in that zone.

Price Interactions

The tool includes logic to track how price interacts with the identified shelves:

• Retests (R): Marked when price enters and exits a zone without breaking out through the opposite side.
• Breakouts (B): Marked when a bar closes outside the boundaries of a zone.
• False Breakouts (FB): Marked when price moves beyond a zone but fails to sustain the momentum, returning back inside.

Details

The indicator constructs a volume profile by fetching data from a user-specified timeframe. This allows for higher precision; for example, if you are viewing a Daily chart, you can set the data timeframe to "5" or "15" minutes to get a more granular view of the volume distribution.

The "Golden Ratio" logic is applied when determining shelf boundaries. If a level being checked for inclusion in a shelf is at the boundaries of the total profile, its volume must be higher than the golden ratio of the preceding volume to be included. This ensures that only significant volume clusters are grouped into zones.

Settings

Data

• Start/End: Sets the starting and ending bar for the volume profile calculation.
• Timeframe: Determines the resolution of the volume data used (e.g., use 5m data for a Daily profile).
• Levels: The number of rows (bins) used to divide the volume profile.
• Value area %: Defines the percentage of total volume to be highlighted as the Value Area (default is 68%).

Shelves

• Shelves Count: The number of high-volume zones to plot. Set to 0 to show only the volume profile.
• Max slot: Toggles a dotted line at the highest volume level within each shelf.
• Show info: Displays the rank of the zone based on volume.
• Show touches: Enables visual labels for Retests (R), Breakouts (B), and False Breakouts (FB).

Style

• Histogram box: Adjusts the background color of the volume profile.
• Up/Down: Customizes colors for bullish and bearish volume.
• Point of Control: Toggles the POC line and extension.
• Developing POC: If enabled, shows how the POC migrated over the duration of the profile.
• Value Area High/Low: Toggles lines and extensions for the boundaries of the Value Area.

FAQ

How do I define the area the profile covers? You can set the start and end times manually in the settings or use the interactive "confirm" feature on the chart to select the range visually.

Why do some zones overlap? The script attempts to group adjacent high-volume slots into a single shelf. Overlaps can occur if multiple distinct volume peaks are located very close to one another relative to the "Levels" setting.

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