CDVD

This script calculates and visualizes the Cumulative Delta Volume Divergence (CDVD) with the MACD indicator. It combines volume-based market analysis with MACD-style momentum to help identify false signals with divergences, trends or potential reversals.

The cumulative delta volume divergence is derived by summing up the differences between uptick volume (volume during price increases) and downtick volume (volume during price decreases) over time.

A Fast EMA and Slow EMA are calculated from the cumulative delta volume to smooth the data.
The difference between these EMAs forms the MACD Line.

A Signal Line is created by applying another EMA to the MACD Line.

The difference between the MACD Line and the Signal Line forms the Histogram:

This indicator helps traders:
Identify false signals with divergences unseen on MACD and Price Action.
Identify bullish or bearish momentum in market volume.
Spot potential trend reversals based on changes in cumulative delta volume dynamics.
Analyze the interplay between price momentum and volume flow.
It’s especially useful for traders who focus on volume-based market dynamics.

Snapshot: Use in conjunction with MACD to identify true divergences.

Important Notice:
Trading financial markets involves significant risk and may not be suitable for all investors. The use of technical indicators like this one does not guarantee profitable results. This indicator should not be used as a standalone analysis tool. It is essential to combine it with other forms of analysis, such as fundamental analysis, risk management strategies, and awareness of current market conditions. Always conduct thorough research.

Disclaimer:
Past performance is not indicative of future results. This indicator is provided for informational and educational purposes only and should not be considered investment advice. Always conduct your own research before making any trading decisions.

Note: The effectiveness of any technical indicator can vary based on market conditions and individual trading styles. It's crucial to test indicators thoroughly using historical data before applying them in live trading scenarios.