Comparing Candle Size and Volume for Divergence Signals

Summary

This indicator compares each candle with the immediately preceding candle, looking for opposing changes in candle size and volume. It labels a candle as a growing divergence when its range increases while volume falls, and as a falling divergence when its range contracts while volume rises. The indicator marks the current candle’s high or low with a corresponding signal pointer.

Users can configure the volume input, display volume bars, and enable alert notifications. The document explicitly cautions that the pointers classify divergence patterns; they do not specify whether to open a long or short position. It provides no performance tests, entry rules, exit rules, or risk controls, so the signals alone do not establish a trading strategy. The comparison is limited to two adjacent candles and may need additional context before it can inform a decision.

Key ideas

• The indicator compares the current candle’s size and volume with those of the preceding candle.
• A larger candle with lower volume produces a growing divergence signal at the high.
• A smaller candle with higher volume produces a falling divergence signal at the low.
• The signal type does not prescribe a trade direction or provide a complete strategy.

Tags

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