Cumulative Delta Volume

The Cumulative Delta Volume indicator tracks the cumulative difference between buying and selling volume to provide a comprehensive view of market conviction and trend sustainability.

Usage

The Usage section describes how the script can be used to identify market trends and potential reversals. By aggregating volume delta over time, traders can observe whether buying or selling pressure is dominant regardless of price action.

• Trend Confirmation: When the Cumulative Delta Volume (CDV) is rising alongside price, it confirms a strong bullish trend supported by aggressive buying. Conversely, if CDV is falling with price, it confirms a bearish trend.
• Divergence Analysis: One of the most powerful applications is spotting divergences. If price reaches a new high but the CDV fails to do so, it suggests that the upward move lacks aggressive buying support and may reverse.
• Visualization Modes: Users can toggle between "Candle" and "Line" styles. The candle mode provides a more granular view of delta fluctuations per period, while the line mode offers a smoother representation of long-term flow.
• Heikin Ashi Smoothing: Enabling Heikin Ashi candles for the CDV helps filter out noise, making it easier to identify the core direction of volume flow.

Details

The script calculates Delta by determining the ratio of buying versus selling volume within each bar. This is achieved by analyzing the relationship between the open, high, low, and close prices (OHLC) and the total volume.

The core logic involves:

1. Rate Calculation: A specific formula determines the percentage of volume attributed to buyers versus sellers based on the wick-to-body ratio.
2. Delta: The calculated rate is applied to the total volume. If the close is higher than the open, the delta is positive (buying); otherwise, it is negative (selling).
3. Accumulation: The ta.cum() function aggregates these delta values over the entire history of the chart to create the Cumulative Delta.

Settings

• Style: Switches the visual output between "Candle" and "Line" formats.
• Heikin Ashi Candles?: When enabled, applies Heikin Ashi smoothing logic to the cumulative delta candles.
• SMA 1 / SMA 2: Toggles the visibility of two Simple Moving Averages.
• SMA Lengths: Sets the lookback period for the respective SMAs.
• EMA 1 / EMA 2: Toggles the visibility of two Exponential Moving Averages.
• EMA Lengths: Sets the lookback period for the respective EMAs.
• Body / Border / Wick Colors: Customizable color settings for the up and down movements of the CDV candles.

FAQ

How can I identify a trend reversal using Cumulative Delta Volume? A trend reversal is often signaled by a divergence where price action continues in one direction while the CDV begins trending in the opposite direction, indicating a shift in market participant aggression.

Can I use this indicator on any timeframe? Yes, the indicator calculates delta based on the volume data available on the current timeframe. It is applicable to intraday, daily, and weekly charts.

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