Volume Zones Indicator

Volume Zones Indicator — VWAP with Dynamic Monthly Volume Zones

This indicator is an enhanced version of the classic VWAP (Volume Weighted Average Price), designed to create clear monthly zones around VWAP based on average price range (ATR) and volume activity.

The core idea is to highlight key zones where price is more likely to reverse or consolidate, based on where significant trading volume occurs.

How does it work?
VWAP is calculated over the last N days (set by the lookbackPeriod input).

Four zones are plotted above and below VWAP, spaced using a multiple of ATR.

Each zone has its own color for clarity:

Blue — closest to VWAP

Red — second band

Green — third band

Orange — outer band (potential breakout or exhaustion zone)

If the current volume exceeds the moving average of volume, it is highlighted directly on the chart. This helps detect accumulation or distribution moments more easily.

What does the trader see?
You see horizontal colored bands on the chart that update at the start of each new month. These zones:

Remain fixed throughout the month
Automatically adjust based on recent volume and volatility
Act as dynamic support/resistance levels

Best used for:
Mean reversion strategies — identifying pullbacks toward value areas

Support and resistance mapping — automatic SR zones based on price/volume behavior

Breakout filtering — when price reaches zone 3 or 4, trend continuation or reversal is likely

Adding volume context to price action — works well with candlestick and pattern analysis

Settings
Lookback Period (Days): VWAP and volume smoothing length
Volume Area Threshold %: Reserved for future functionality

Works on any timeframe; best suited for 4H timeframe.

Zones are calculated and fixed monthly for clean visual context

Combines price structure with actual volume flow for more reliable decision-making