A volume-based indicator that colors price bars to show the strength and direction of price movements by comparing current volume to its historical average.
Explore complementary indicator rolesHow it works
The Volume Based Coloured Bars indicator analyzes trading volume in relation to its 21-day simple moving average to provide visual signals about price movement strength. It uses a color-coding system where bar colors change based on both price direction and volume intensity, with red and green shades representing downward and upward price movements respectively.
The indicator calculates volume relative to its 21-day average, creating six distinct color categories that range from dark red (strong bearish volume) to dark green (strong bullish volume). This allows traders to quickly assess whether current price movements are supported by significant trading volume or potentially weak market participation.
Why it may be useful
Volume is a critical aspect of technical analysis that helps traders understand the conviction behind price movements and potential trend strength. By color-coding bars, this indicator provides an intuitive visual representation of market dynamics, allowing traders to quickly assess whether price changes are backed by substantial trading activity.
The volume-based coloring helps traders differentiate between meaningful price movements and potentially weak or misleading price actions. It offers an immediate visual cue about market sentiment, enabling traders to make more informed decisions about potential entry and exit points.
When to explore it
This indicator is most effective in markets with significant trading volume and clear price trends, such as stocks and cryptocurrencies. Traders can use it to confirm trend strength, identify potential trend reversals, and assess the reliability of price movements across different timeframes.
The Volume Based Coloured Bars are particularly useful during periods of market volatility, helping traders distinguish between genuine momentum and potential false signals. Traders can adjust the default 21-day average to suit different market types, with recommendations to use 30 days for cryptocurrency trading.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
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