CVD Divergence Insights

The CVD Divergence Insights indicator is a volume-aware oscillator and divergence detector designed to identify market imbalances between price action and cumulative volume delta. By comparing normalized price movement with Cumulative Volume Delta (CVD), this tool highlights potential absorption, failed pressure, and smart money activity that may not be visible through price action alone.

Usage

The Usage section focuses on identifying tension in the market caused by the decoupling of volume aggression and price results.

• Identifying Divergences: When price creates a higher high but the CVD oscillator creates a lower high (or vice-versa), it signals a potential trend exhaustion or absorption by passive orders.
• Absorption Setups: A "Hidden Bullish Divergence" occurs when price forms a higher low while CVD forms a lower low. This indicates aggressive sellers are active, but price is resilient, suggesting passive buying absorption.
• Spike Detection: Green and red dots on the oscillator highlight statistical spikes (based on standard deviation). These spikes represent unusually large divergence activity and often precede significant momentum shifts.
• Volume Weighting: Enabling the "Volume Weighted?" setting scales the oscillator by relative volume, helping traders deprioritize low-volume noise and focus on high-conviction moves.

Details

The indicator utilizes lower-timeframe data to calculate precise delta volume accumulated per bar. It employs a normalization process to compare two different units of measurement—price and volume—on a unified scale.

The tool includes several advanced visualization layers:

• Absorption Cloud: An optional overlay that displays the oscillator's state directly on the price chart as a color-coded cloud.
• Effort & Efficiency: A scoring system that measures the "result" (price movement) vs. the "effort" (volume delta).
• Big Trades & Spike POC: For users with high-tier TradingView plans, the script can utilize native footprint data to visualize Point of Control (POC) levels and significant trade clusters within divergence zones.

Settings

Data Collection

• Anchor Period: Sets the timeframe for CVD resets.
• Use Footprint Data: Enables TradingView's native footprint data for premium users to achieve higher precision.
• Lower Timeframe: Manually overrides the calculation granularity for delta data.

Moving Average

• MA Length: The lookback period used to smooth both price and CVD.
• MA Type: Select from various smoothing methods including EMA, SMA, HMA, ZLEMA, and more.

Oscillator

• Volume Weighted?: Scales the divergence output by relative volume intensity.
• Lookback: Defines the period for volume normalization and spike detection.
• Divergence Spike Threshold: The standard deviation multiplier required to trigger a spike dot.
• Signal Line Length: Length for the optional EMA signal line.

Visualization Groups

• Absorption Cloud: Toggles the price-chart overlay and its ATR-based scaling.
• Effort & Efficiency: Configures the display of effort/result scores.
• Spike POC & Big Trades: Settings for identifying and extending volume-heavy price levels within divergence bars.

FAQ

How do I interpret the divergence spikes? Spike dots represent statistical extremes where the volume delta is significantly disconnected from the price movement. These are areas of high tension that typically resolve in a sharp reversal or breakout.

Does this indicator repaint? The CVD Divergence Insights uses lower-timeframe data. While the current bar may update in real-time as new ticks arrive, the historical signals are calculated based on confirmed bar data to ensure consistency.

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