Dual Volume Divergence Index [DW]

The Dual Volume Divergence Index [DW] indicator is a momentum and trend identification tool that tracks the divergences between the Positive Volume Index (PVI) and the Negative Volume Index (NVI) relative to their respective moving averages.

Usage

The Dual Volume Divergence Index [DW] provides multiple visualization modes to help traders identify trending price activity based on volume characteristics:

• Cloud Mode: Displays the divergence between the PVI and its EMA alongside the NVI and its EMA. The interaction between these two lines (Positive vs. Negative volume force) creates a cloud that indicates the dominant market pressure.
• Oscillator Mode: Plots the net difference between the PVI and NVI divergences. A value above zero suggests positive volume flow is more dominant than negative volume flow, while a value below zero suggests the opposite.
• Bar Counter Mode: Counts the consecutive number of bars where the oscillator remains in a positive or negative phase, helping traders gauge the duration and strength of a trend.

Details

This tool is an experimental variation of Paul L. Dysart's Positive Volume Index (PVI) and Negative Volume Index (NVI). Traditional PVI focuses on periods where volume increases compared to the previous bar, while NVI focuses on periods where volume decreases.

By calculating the divergence of both PVI and NVI from their exponential moving averages (EMAs), this script isolates the trend components within volume flows. The final index compares these divergences to provide a comprehensive view of how "smart money" (often associated with NVI) and "uninformed money" (often associated with PVI) are interacting with current price action.

Settings

Main Settings

• Source: Determines the price data used for the index calculations (default is Close).
• Sampling Period: The period used for the Signal EMA calculation applied to the PVI and NVI.
• Smoothing Period: The period used for the final smoothing of the divergence values.
• Volume Type: Choose between "Default" (using the symbol's volume data) or "Tick" (calculating volume based on price movement).
• Mode Selection: Toggles the visual output between Cloud Mode, Oscillator Mode, and Bar Counter Mode.

FAQ

How do I interpret the Cloud Mode?

When the PVI Divergence line is above the NVI Divergence line, it indicates bullish volume momentum. Conversely, when the NVI Divergence is higher, it indicates bearish volume momentum.

What does the Oscillator Mode tell me?

The oscillator represents the net strength of volume divergence. Crosses above zero are often used as bullish signals, while crosses below zero are used as bearish signals.

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

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