Coloring Volume at New Highs and Lows to Spot Pullback Divergence

Summary

This indicator colors volume according to how each bar’s high and low compare with the prior bar. Bars that make a higher high without a lower low receive one color; bars that make a lower low without a higher high receive another. Bars extending both sides are marked neutral, while inside bars are hidden. The accompanying interpretation uses the tallest volume bar during a pullback as a reference, then looks for volume divergence near highs in a downtrend or near lows in an uptrend as a possible entry clue.

The idea adapts an existing volume display concept for ProRealTime. It is a visual aid and discretionary setup description, not a fully specified mechanical trading system. The text offers no empirical results, risk rules, or precise divergence thresholds, and the bar classification does not itself establish buying or selling pressure. Users would need to define confirmation and exits and test the method across markets and data conditions.

Key ideas

• Volume bars are classified by whether their highs and lows exceed the previous bar’s range.
• Inside bars are suppressed, while bars extending both sides receive a neutral classification.
• The suggested setup compares pullback volume with later volume near trend highs or lows.
• The description provides no precise divergence threshold, exit rule, or performance evidence.

Tags

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