Classifying Volume Bars by Candlestick Direction

Summary

This indicator separates traded volume into positive and negative histogram bars according to the direction of each candlestick. A bullish candle contributes a positive bar, while a bearish candle contributes a negative bar. The display offers two ways to determine candle direction: compare the standard candle’s open and close, or use the direction of a Heiken Ashi candle.

The document describes the indicator’s behavior and its single adjustable setting, but provides no trading rules, performance evidence, or guidance on interpreting the resulting bars. Directional volume is therefore presented as a visualization of volume alongside price direction, not as a validated signal for entering or exiting positions. The choice of candle calculation method can change how bars are classified, so the two display modes should not be assumed to produce equivalent readings.

Key ideas

• The indicator assigns volume to a positive or negative histogram according to candle direction.
• Standard candle direction is determined by comparing its open and close.
• An alternative mode uses Heiken Ashi candle direction for the classification.
• The document explains the display setting but gives no evidence that it predicts returns.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.