Dynamic Volume Profile Oscillator v2

A powerful technical indicator that transforms traditional volume analysis into a responsive oscillator by creating dynamic volume profiles and measuring price deviation from volume-weighted equilibrium levels.

Overview

This indicator provides traders with insights into market momentum and potential reversals by analyzing the relationship between price, volume, and historical volatility. It features an adaptive midline and beautiful gradient visualization with multi-level intensity zones that clearly identify bullish and bearish market conditions.

Key Features

• Volume-Weighted Analysis: Measures price deviation from volume-weighted equilibrium
• Adaptive Zones: Dynamic support/resistance zones that adjust to market conditions
• Gradient Visualization: 10-level intensity zones for clear trend strength identification
• Dual Signal Lines: Fast and slow signals for trend confirmation and crossover opportunities
• Mean Reversion Mode: Identifies price extremes relative to volume patterns
• Fully Customizable: Adjustable sensitivity, smoothing, and calculation parameters

Trading Strategies

Trend Following

• Enter long positions when oscillator crosses above the adaptive midline
• Enter short positions when oscillator crosses below the adaptive midline
• Use signal line crossovers for entry timing
• Monitor gradient intensity to gauge trend strength

Mean Reversion Trading

• Look for oscillator extremes shown by intense gradient colors
• Prepare for potential reversals when the oscillator reaches upper/lower zones
• Use divergences between price and oscillator for confirmation
• Consider scaling positions based on gradient intensity

Settings

• Price Source: Select which price data to analyze
• Lookback Period: Number of bars for calculation (default: 50)
• Smoothing Length: Controls oscillator smoothness (default: 5)
• Sensitivity: Adjusts responsiveness to price/volume changes (default: 1.0)
• Mean Reversion Mode: Toggles calculation methodology (default: On)
• Adaptive Midline: Uses dynamic midline based on historical values (default: On)
• Zone Width Multiplier: Controls width of bullish/bearish zones (default: 1.5)

Best Practices

• Adjust sensitivity based on the asset's typical volatility
• Use longer smoothing for swing trading, shorter for day trading
• Combine with support/resistance levels for optimal entry/exit points
• Monitor signal line crossovers for confirmation of trend changes

Based on open source indicator by AlphaAlgos