Signed Smoothed Volume and Price Divergence Signals

Summary

The indicator transforms volume into a signed series: each bar’s volume is weighted by recency and given a positive or negative sign according to whether the close is above or below the open. It then applies several nested weighted averages, with lengths derived from two user-set periods. The resulting series is plotted around zero, and its direction or breaks can be read as changes in buying or selling pressure.

Divergence signals compare pivots in the smoothed volume series with price pivots. Regular bullish divergence pairs a lower price low with a higher indicator low; regular bearish divergence pairs a higher price high with a lower indicator high. Optional hidden divergence conditions reverse those relationships. The document also shows a BTC/USDT futures backtest setup, but gives no performance results. Pivot confirmation uses bars on both sides, so signals are delayed; the brief test window and absent reported metrics do not establish predictive value. The entry logic uses only regular bullish and bearish signals.

Key ideas

• The indicator signs each bar’s volume according to the relationship between its close and open.
• Several nested weighted averages smooth the signed volume series.
• Regular bullish and bearish signals compare price pivots with corresponding indicator pivots.
• Hidden divergence plots can be enabled, but are disabled by default.
• The published BTC/USDT futures setup provides no outcome statistics, and confirmed pivots are delayed.

Tags

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