Thie indicator is a modified and upgraded version of the popular ADX tool. ADX is used to determine the strength of a trend, and also to determine the direction in which the trend is likely to go. With this script, I have added in the formula the usage of volume, leading to the following functionality.
The length is used to determine the period to calculate the trend strength and direction, and the average is used to then determine the oscillator and to confront the previous line. The volume average determines how many volumes bars the indicator should use to determine if a volume bar is above or below average if volume mode is selected.
With the volume mode on, you'll get the DI+ and DI- lines, which are by default displayed as a histogram that calculates the difference between the two lines, called "Directional difference", are calculated using also the volume in the formula, multiplying the normal output by the volume multiplier. I suggest using this mode in high-volume markets. The trend strength difference is the area calculated using the difference between the ADX line and his moving average and can be used to analyze divergences in the swing points.
It has a lot of improvements and new functionalities, like: - Histogram to show the output at best - Averages to compare the data - The option to include the volume inside of the formula - Other options and esthetic changes
This indicator is created to improve the usability of the popular ADX indicator, including the very important variable of the volumes, in fact, it's the best to use for the Volume Spread Analysis.
Informacje o Wersji
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This upgrade of the script changes the formula for the volume-integrated mode improving the volume multiplier formula. Additionally, as requested, I've added the feature to change the bar color according to the direction of the histogram of the oscillator.
@OmegaTools, As the creator of this indicator can you please tell me on how to filter some of the signals, it gives damn accurate signals but theres always room for improvement
aurho
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@aurho, @OmegaTools too good with PA but if some false indications can be filtered in choppy markets or other conditions this would be a game changer for sure
OmegaTools
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@aurho, Hi, and thanks for commenting. Every tool, indicator, or analysis aims to answer one specific point of the trading checklist. The 4 main points are: Trend (the direction, the bias, the 200-period ema is commonly used for that), the location (like Fibonacci or the VWAP), the signal (like candlestick pattern or short-period ema cross. This tool is great to use as a filter for your strategy or for the trend parameter if used with higher settings. Specifically, what have you thought to improve the indicator? Please let me know.
Amazing work