Dual Volume Divergence Line for Price and Volume Signals
Summary
The Dual Volume Divergence Line combines Positive Volume Index and Negative Volume Index calculations to create a line intended to show directional pressure from volume. It starts with typical price, smooths the two indices, compares each with its weighted average, and uses the difference between those deviations to form the indicator. A regression line helps show changes in momentum, while projected bands mark relative extremes.
The indicator also detects regular and hidden divergences by comparing price pivots with pivots in either the raw or smoothed oscillator. Its labels can flag possible bullish or bearish divergence; the line’s position relative to its regression and the bands offer additional visual context. The document gives formulas, configurable settings, and implementation code, but supplies no backtest or performance evidence. Its descriptions of the indices refer to price changes rather than changes in volume, so the name may overstate how directly the calculation measures volume. Divergences and band reactions are potential signals, not confirmation of reversals, and settings may need evaluation for the market and timeframe used.
Key ideas
- The indicator forms a combined line from the deviations of smoothed Positive and Negative Volume Index series.
- A regression comparison is used to visualize shifts in the line’s direction and momentum.
- Dynamic bands are derived from recent indicator extremes and are presented as zones for evaluating relative extremes.
- Pivot comparisons identify regular and hidden divergences between price and a selectable oscillator series.
- The document provides no empirical performance evidence, and the described index updates use price changes rather than volume changes.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.