Cumulative Volume Delta Divergence [TradingFinder] Periodic EMA

9월 22일

🔵Introduction

The Cumulative Volume Delta (CVD) is a powerful tool in technical analysis that is derived from market volume or trading activity. The Cumulative Volume Delta Divergence Detector Indicator helps traders identify Cumulative Volume Delta Divergences (CVD Divergence), which can provide reliable trading signals.

These divergences, such as bullish and bearish CVD divergences, act as key indicators of potential trend reversals in financial markets. By analyzing CVD divergences, traders can gain insights into the strength of buying and selling pressure and make more informed predictions about price trends.

The CVD indicator is particularly effective for traders who engage in day trading and scalping, as it helps identify price reversal points by analyzing volume and price behavior.
Using the CVD indicator in combination with other technical tools such as support and resistance levels and candlestick patterns allows for a more accurate market analysis.


🔵How to Use

Divergences are one of the most important technical analysis signals that indicate the current strength of a price move may not be sustainable.

Cumulative Volume Delta Divergence helps traders identify potential trading opportunities that may not be visible on the price chart alone.

This type of divergence examines the relationship between buying and selling volume and price, enabling traders to better understand price trends.


🟣Bullish CVD Divergence

A bullish CVD divergence occurs when the price makes a lower low, but the CVD indicator shows a higher low. This indicates increasing buying pressure in the market, even though the price is declining. In other words, despite the price dropping, buyers are gradually gaining strength, which could signal a price reversal and the start of a bullish trend.

How to use this signal: In this scenario, traders looking to go long can use this signal as a favorable opportunity to enter the market. After a bullish divergence, the market typically tends to move upward.

To reduce risk, traders can wait for further confirmation from the price chart. For example, if the price breaks through the previous high after the divergence or breaks a resistance level, this could be a more reliable signal for entering the market.




🟣Bearish CVD Divergence

A bearish CVD divergence is the opposite of a bullish divergence. In this type of divergence, the price makes a higher high, but the CVD indicator shows a lower high. This indicates decreasing buying pressure and weakening momentum in the current bullish trend. A bearish divergence often serves as a warning of a potential market reversal to the downside.

How to use this signal: Traders can use this divergence as an opportunity to exit long positions or enter short positions. When the CVD indicator makes a lower high compared to the price, it signals weakness in buyer strength.

If traders receive further confirmation from the price chart, such as a break of key support levels or an increase in selling volume, this can serve as a stronger signal for the beginning of a bearish trend.




🟣How to Build a Trading Strategy with Cumulative Volume Delta Divergence

Using CVD divergence alone may not be sufficient. Traders should combine this tool with other technical analysis techniques and indicators to have more confidence in their decisions. For example, when observing a CVD divergence, traders can also analyze volume, trend lines, or candlestick patterns to get a more accurate market analysis.

Additionally, risk management should always be a priority. Using stop-loss orders and properly sizing trades can help traders minimize their losses if they make a mistake.



🔵Setting

Divergence Fractal Period: Determines the period of swings. The minimum and default value is 2.

CVD Period: You can set the period of " Periodic " and " EMA " modes.

Cumulative Mode: It has three modes "Periodic" and "EMA". In "Periodic" mode, it accumulates the volume periodically and in "EMA" mode, it calculates the moving average of the volume.






Market Ultra Data: If you turn on this feature, 26 large brokers will be included in the calculation of the trading volume. The advantage of this capability is to have more reliable volume data. You should be careful to specify the market you are in, FOREX brokers and Crypto brokers are different.


🔵Conclusion


The Cumulative Volume Delta (CVD) indicator is a powerful tool in technical analysis, helping traders better identify price trends and make more accurate market predictions. By identifying CVD divergences, traders can anticipate price reversals and time their market entries and exits accordingly.

Bullish and bearish CVD divergences each provide valuable signals that can help traders identify the best entry and exit points in the market. A bullish CVD divergence signals strength in buying that will likely lead to a price increase, while a bearish CVD divergence indicates weakness in the bullish trend and the potential for the beginning of a bearish trend.

Overall, combining CVD with other technical analysis tools and employing risk management strategies can help traders make better trading decisions and capitalize on available market opportunities.