Volume Oscillators Focus Indicator

2024년 1월 21일

Volume Oscillators Focus Indicator
Short name VolumeFocus

This indicator seeks to show episodes of high and low volumes analyzing these by calculating three lines and create colorings on the basis of where these lines go relative to each other.

The first line is a percent based on the current volume level, for which a 3 period sma is taken.
It is calculated by using the lowest volume in the lookback as zero, the highest as 100 percent
This line is called “current volume level”
The second line is a percent, based on the median volume of the last five periods. This line is called “new normal volume”
The third line is a percent, based on the median volume of the lookback period. This is called “old normal volume”
For the second and third line the lowest “new normal volume” in the lookback is used as zero while the 100 percent level is the same as in the calculation of the first line.

The reasoning for the colors is as follows:
When both current en new normal level are below old normal, the volume is to be considered ‘low’. When volume is low, the background color is gray and the fill color between the old normal and current lines is navy.
When both current and new normal level are above old normal, the volume is to be considered ‘significantly expanded’. When this happens the fill color between current and old normal is orange.
When volume is not low it is considered normal or high and the background color is green.

The lookback is set to 50, it advise to keep it that way.

Use of the indicator.
Volume results from focus of the market on the instrument. When the price seems correct, some buy it, some sell it but most don’t care. Then the volume is low, the background is gray. The navy fill color indicates ‘how low’.
When the price seems off, many will care and start trading. Then volume is high, background is green. When the trading is really heating up the orange fill color appears, showing that the market has high focus on this instrument, perhaps move in a trend.

Of course we don’t know in which way the market tries to ‘correct’ the price, for that purpose I use this indicator together with REVE Cohorts which provide useful markers to explain what the excess volume means.

Eykpunter

2024년 2월 2일

릴리즈 노트

The gray and green background colors are now lighter when the price goes down, darker otherwise.
As price the middle between high and low is used, so this does not exactly coincide with the color of the candle.