Introducing the Volume Exhaustion by AlgoAlpha, is an innovative tool that aims to identify potential exhaustion or peaks in trading volume, which can be a key indicator for reversals or continuations in market trends 🔶.
Key Features: * Signal Plotting: A special feature is the plotting of 'Release' signals, marked by orange diamonds, indicating points where the exhaustion index crosses under its previous value and is above a certain boundary. This could signify critical market points 🚨.
Calculation Length Customization: Users can adjust the calculation and Signal lengths to suit their trading style, allowing for flexibility in analysis over different time periods. ☝️
len = input(50, "Calculation Length")
len2 = input(8, "Signal Length")
Visual Appeal: The script offers customizable colors (col for the indicator and col1 for the background) enhancing the visual clarity and user experience 💡.
col = input.color(color.white, "Indicator Color")
col1 = input.color(color.gray, "Background Color")
Advanced Volume Processing: At its core, the script utilizes a combination of Hull Moving Average (HMA) and Exponential Moving Average (EMA) applied to the volume data. This sophisticated approach helps in smoothing out the volume data and reducing lag.
sv = ta.hma(volume, len)
ssv = ta.hma(sv, len)
Volume Exhaustion Detection: The script calculates the difference between the volume and its smoothed version, normalizing this value to create an exhaustion index (fff). Positive values of this index suggest potential volume exhaustion.
Boundary and Zero Line: The script includes a boundary line (boundary) and a zero line (zero), with the area between them filled for enhanced visual interpretation. This helps in assessing the relative position of the exhaustion index.
Customizable Background: The script colors the background of the chart for better readability and to distinguish the indicator’s area clearly.
Overall, Volume Exhaustion [AlgoAlpha] is designed for traders who focus on volume analysis. It provides a unique perspective on volume trends and potential exhaustion points, which can be crucial for making informed trading decisions. This script is a valuable addition for traders looking to enhance their trading experience with advanced volume analysis tools.
Thank you for the indicator! But how can I set an alarm when the diamond released?
Allesmann
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hi, thx for your work! what time frame is recomended for standard settings, and what settings would you use on a 5 min timeframe ?
AlgoAlpha
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@Allesmann, Hello! Due to the huge amounts of scalping/trading styles, it's really hard to give an answer on what specific inputs to use, so far the default seems to universally work well, but if you provide us with more information we can potentially give a range of indicator lengths that might suite you.
Allesmann
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@AlgoAlpha,@AlgoAlpha, Hi, thanks for the fast reply! I scalp highly volatile crypto coins on the 5m/1m chart, and primarily look for reversals and strong trends that I can get into. Was that enough information? Unfortunately, I haven't gotten around to testing the indicator properly yet, which is why I'm asking about the optimal settings, but I'll just try out the standard settings :) (unless of course you now have better settings for me ^^ ) thanks again!
AlgoAlpha
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@Allesmann, Our default settings should be good already, we've noticed that trading this along with levels such as support and resistance has marked out potentially pivot points quite decently.