Volume Equilibrium

قبل ١٠ ساعات

The intent behind this indicator is to provide comprehensive information relating to volume compared to multiple timeframes. This indicator allows one to see what the market 'theoretically' sees as 'fair-value' whilst also allowing one to gauge where the price of a stock is headed.


Volume Equilibrium
The main indicator finds the difference between buying volume and selling volume, under the basic presumption that more buying volume indicates greater bullish sentiment and vice versa.

Buying Volume = volume when close price is higher than open price.
Selling Volume = volume when close price is lower than open price.
Volume Balance = Cumulative Buying Volume − Cumulative Selling Volume

Volume Balance is then expressed as a percentage by dividing by total volume


This indicator is composed of three different lengths of the same indicator. Short, Mid, and Long term representations of Volume Equilibrium. The difference between the mid and long term are highlighted so to make it easy to see where volume is going relative to a longer time frame.

HOW TO USE:
At 0 ---> Equilibrium ---> Equal Buying/Selling Volume
Above 0 ---> More buying Volume
Below 0 ---> More selling Volume

Using theory, it is assumed that the price is at a 'fair-value' when the buying/selling volume is at 0. This is of course relative to the respective timeframe of your choosing. More weight given to larger timeframes.


Volume Histogram
It is a basic volume chart that represents the total volume though has highlighted bars so to indicate buying(green) and selling(red) volume. This allows one to see what the indicator is based off of.


Open-Close Oscillator(not needed)
Calculates the average open-close for a selected timeframe and then provides the current closing price relative to that average open-close. Very simply put, values below 0 indicate bearish and values above 0 generally indicate bullishness. This indicator is for a quick reference of price action relative to volume.
Another way to use this indicator, though unique, is to analyze the separate open-close lines themselves. Using the open-close bands, bullishness is defined as increasing closing prices and bearish as decreasing closing prices. So, in regard to this indicator, bear sessions can be indicated by the opening line being below the closing line and bull sessions as the opening line being above. Use the 'flip' of these lines to your advantage, they are very helpful at capturing long continuous sentiment.



This indicator is composed of great information though I still think it best to use many different indicators to help you with your trades.




NOTE: Be aware of what we are trying to analyze, Volume. This means that one should also look out for divergences to capture early indications of reversals. This indicator can be leveraged greatly.