Deeply inspired by the Weiss wave indicator, the following indicator aims to return the accumulations of rising and declining volume of a specific trend. Positive waves are constructed using rising volume while negative waves are using declining volume.
The trend is determined by the sign of the rise of a rolling linear regression.
Settings
Length : Period of the indicator.
Src : Source of the indicator.
Linearity : Allows the output of the indicator to look more linear.
Mult : the multiplicative factor of both the upper and lower levels
Gradient : Use a gradient as color for the waves, true by default.
Usages
The trend volume accumulations (TVA) indicator allows determining the current price trend while taking into account volume, with blue colors representing an uptrend and red colors representing a downtrend.
The first motivation behind this indicator was to see if movements mostly made of declining volume were different from ones made of rising volume.
Waves of low amplitude represent movements with low trading activity.
Using higher values of Linearity allows giving less importance to individual volumes values, thus returning more linear waves as a result.
The indicator includes two levels, the upper one is derived from the cumulative mean of the waves based on rising volume, while the lower one is based on the cumulative mean of the waves based on declining volume, when a wave reaches a level we can expect the current trend to reverse. You can use different values of mult to control the distance from 0 of each level.
@RedKTrader, how do you use it? I don't understand why there are two levels?
RedKTrader
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@bruitdefond, the script author @LuxAlgo would be the best expert to answer your questions :)
bruitdefond
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@LuxAlgo "The indicator includes two levels, the upper one is derived from the cumulative mean of the waves based on rising volume , while the lower one is based on the cumulative mean of the waves based on declining volume"
Could you explain this a bit more? If the levels denote rising/declining volume, how can a wave reach both at the same time?
bruitdefond
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@RedKTrader, Does he mean movements up or down on volume that is increasing or decreasing? Or does he mean that he wants to see if there is a difference between volume while price is moving up and volume while price is moving down INDEPENDENT of the actual size of the volume? I guess that is what's confusing me
Noob question here....So lets say you are looking at this on the weekly chart, and the price is going up exponentially, but the indicator is showing an increase in "red" bars; does this mean that there is more selling over that week even though the price is going up? (eg-if lots of sells mon-thur but lots of buys Friday to push price up) or does it mean something else? because I thought red bars meant declining volume?
azinc
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1=true and 0= false...increíble plot gradient.
surfkid
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Thank you, Alex! This is an elegant contextual tool.