Cumulative Volume Delta for Reading Order-Flow Divergence

Summary

The document explains cumulative volume delta (CVD) as a running total of estimated aggressive buying volume minus aggressive selling volume. It describes classifying volume within each bar by its price distribution, then accumulating the difference to show order-flow direction. One proposed signal is divergence: price makes a higher high while CVD makes a lower high, which the article interprets as possible buying weakness or absorption by passive liquidity.

The text says the indicator resets at each trading session and is designed to run on ordinary broker feeds without downloading extensive tick data. It suggests using the reading on lower timeframes alongside order-block analysis. However, it gives no implementation details, validation, examples, or performance results. The volume classification is described as an approximation, so its accuracy depends on feed and method; divergence alone does not establish institutional activity or guarantee a reversal.

Key ideas

• CVD accumulates estimated aggressive buying volume minus aggressive selling volume.
• The described method infers buy and sell volume from intrabar price distribution.
• A lower CVD high alongside a higher price high is presented as a possible warning of weakening buying pressure.
• The indicator is said to reset at the start of each trading session.
• The article provides no evidence that the signal predicts reversals or identifies institutional trading reliably.

Tags

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