Indicator: HawkEye Volume Indicator

The HawkEye Volume Indicator tool identifies bullish, bearish, and neutral market volume by analyzing the relationship between price spread and volume through Volume Spread Analysis (VSA) principles.

Usage

The HawkEye Volume Indicator is used to determine the underlying sentiment of market participants by color-coding volume bars based on price action and relative volume levels. Traders use these signals to confirm trends or anticipate potential reversals.

• Bullish Volume (Green): Indicates strong buying pressure. This often occurs when the close is in the upper portion of the range and volume is significant relative to its average.
• Bearish Volume (Red): Indicates strong selling pressure. This occurs when the close is in the lower portion of the range, typically accompanied by high volume and a wide price spread.
• Neutral/Congestion Volume (Gray): Indicates a lack of conviction or market indecision. This is triggered during low volume periods or when the price range is narrow, suggesting a consolidation phase.

The indicator is most effective when used to confirm breakouts. For example, a price breakout accompanied by a green volume bar suggests a high-probability bullish continuation, whereas a breakout on gray volume may indicate a lack of momentum.

Details

The script is a port of the volume analysis system developed by Nigel Hawks. It operates on the core concept of Volume Spread Analysis, which suggests that the relationship between the price range (High to Low) and the traded volume reveals the intent of institutional "smart money."

The algorithm functions by:

1. Calculating the average price range and average volume over a user-defined lookback period.
2. Establishing price boundaries (upper and lower "zones") based on the previous candle's mid-point and a divisor-based offset.
3. Evaluating the current candle's close and volume against these averages and boundaries.

Unlike standard volume bars that only show whether the price closed up or down, this indicator uses multi-step logic to filter out noise. For instance, a bullish signal is not just based on a green candle, but also considers whether the price range is expanding and if the volume supports that expansion.

Settings

• Length: Determines the lookback period used for the Simple Moving Average (SMA) of both the price range and the volume. Increasing this value smooths the sensitivity of the "average" baseline.
• Divisor: Adjusts the sensitivity of the price boundary calculations. A lower divisor increases the width of the mid-range zone, affecting how frequently bullish or bearish signals are triggered relative to neutral signals.

FAQ

What is the difference between this and standard volume bars? Standard volume bars only indicate if the price closed higher or lower than the previous bar. The HawkEye Volume Indicator analyzes the spread of the candle and compares it to historical averages to determine the actual quality of the buying or selling pressure.

What does the gray volume bar signify? A gray bar signifies a "neutral" state or "bottleneck" volume. This typically appears when the market is in a consolidation phase, when volume is exceptionally low, or when the price movement does not provide a clear directional bias according to VSA rules.

How can I get access to the HawkEye Volume Indicator? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.