Detecting Unusual Trading Volume with Percentile Bubble Clusters

Summary

This indicator marks unusually high volume directly on a price chart. It compares each bar’s volume with percentile thresholds across short, medium, and long lookback windows of 20, 50, and 100 bars. The three cluster levels identify the upper 25%, 10%, and 3% of volume observations; a consensus setting determines whether one, two, or all three windows must qualify. The largest qualifying level sets the bubble size, and bubbles appear below bullish candles or above bearish candles. Labels can show volume, its ratio to the 50-bar average, or both.

The accompanying interpretation treats large bubbles late in a move as possible exhaustion, bubbles on range breaks as participation confirmation, and repeated bubbles against a price move as possible absorption. These are visual hypotheses rather than tested signals: the document gives no backtest or measured predictive performance. Results depend on available volume data, lookback and percentile settings, and the chosen consensus mode. The author also notes that instruments without volume data cannot use the indicator.

Key ideas

• Volume is ranked against recent observations using percentile thresholds rather than a fixed multiple of average volume.
• Three windows of 20, 50, and 100 bars are combined using an any, majority, or all consensus rule.
• Small, medium, and large clusters correspond to the 75th, 90th, and 97th percentile thresholds.
• Bubble placement and candle direction indicate whether the bar is classified as a buy or sell cluster.
• The suggested uses include breakout confirmation and spotting possible exhaustion or absorption, but predictive performance is not established.

Tags

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