Dual Volume Divergence Index Quantitative Qualitative Estimation

The Dual Volume Divergence Index Quantitative Qualitative Estimation [DW] indicator is a trend and wave activity identification tool that applies the QQE logic to a volume-based divergence index rather than the traditional RSI. It provides traders with a refined perspective on market sentiment by analyzing the relationship between price action and volume movements.

Usage

The indicator can be used to identify trend direction and potential momentum shifts based on the relationship between the DVDI oscillator and its trailing levels.

• Trend Identification: When the DVDI oscillator is above the center line and both trailing levels, it indicates a strong bullish trend (highlighted by green bar colors). Conversely, when it is below the center line and both trailing levels, it indicates a strong bearish trend (highlighted by red bar colors).
• Momentum Shifts: Crosses between the DVDI oscillator and the Fast or Slow Trailing Levels often signal changes in wave activity or potential reversals.
• Volume Analysis: The indicator automatically defaults to tick volume for symbols without real volume data, ensuring consistent functionality across different asset classes like Forex or Indices.

Details

The script operates by first calculating the Dual Volume Divergence Index (DVDI). This is achieved by taking the difference between the Positive Volume Index (PVI) and its EMA, and the Negative Volume Index (NVI) and its EMA, then finding the difference between these two results.

Instead of the standard RSI used in traditional QQE indicators, this study applies trailing levels calculated using the Average True Range (ATR) of the DVDI oscillator. Furthermore, the center line is dynamic by default, calculated using a cumulative average of the oscillator to better adapt to long-term market shifts, though a static zero-line option is available.

Settings

• Source: The price data used for the calculation (default is Close).
• Sampling Period: Determines the lookback period for the primary DVDI calculation.
• Smoothing Period: Controls the EMA smoothing applied to the volume indices.
• Volume Type: Allows selection between "Default" (real volume if available) and "Tick" volume.
• Fast Trailing Level Range Multiplier: Adjusts the sensitivity of the fast-reacting trailing level.
• Slow Trailing Level Range Multiplier: Adjusts the sensitivity of the slow-reacting trailing level.
• Center Line Type: Choose between "Dynamic" (cumulative average) or "Static" (fixed at zero).

FAQ

How do I use this on Forex pairs?

Ensure the "Volume Type" setting is set to "Tick" if your data provider does not provide real volume for Forex pairs.

What do the different bar colors mean?

Bright colors indicate strong trends where the oscillator is on the same side of both the trailing levels and the center line. Faded colors indicate weakening momentum or potential transitions.

How can I access the Dual Volume Divergence Index Quantitative Qualitative Estimation [DW]?

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