A volume-focused indicator that analyzes market trading volume through three calculated lines, providing insights into market activity, focus, and potential price corrections.
Explore complementary indicator rolesHow it works
The Volume Focus Indicator calculates three percent-based lines using volume data: current volume level, new normal volume, and old normal volume. It uses a 50-period lookback window to determine these lines, with the lowest volume set as zero and the highest volume set as 100 percent.
The indicator creates a dynamic visualization by color-coding the volume levels and their relationships. When current and new normal volumes are below the old normal volume, the background turns gray, indicating low market activity. Conversely, when both current and new normal volumes exceed the old normal volume, the background turns green, signaling normal or high market interest.
Why it may be useful
The Volume Focus Indicator provides traders with a nuanced view of market dynamics by translating raw volume data into easily interpretable visual signals. By showing how volume changes relative to historical norms, traders can quickly assess market sentiment and potential price movement momentum.
This indicator helps traders understand market participation levels, revealing whether an instrument is experiencing low, normal, or significantly expanded trading activity. The color-coded system allows for rapid identification of market focus, enabling traders to make more informed decisions about potential trend developments or price corrections.
When to explore it
The Volume Focus Indicator is most effective when used in conjunction with other trend and momentum indicators, particularly during periods of potential price transition or market uncertainty. It works best in markets with consistent trading activity and can provide valuable insights across various timeframes and asset classes.
Traders should pay special attention to the indicator during breakouts, trend reversals, and when combined with other volume-based or trend-following tools like REVE Cohorts. The most significant signals emerge when the volume levels suggest a meaningful shift in market participation or potential price correction.
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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.
