OPEN-SOURCE SCRIPT
On Balance Volume Deviation
The objective of this indicator is to be a leading indicator that can detect a large price change before it happens. It is based on the On Balance Volume (OBV) indicator, which is a leading indicator based on the premise that a large change in volume often precedes a large price change. This indicator charts the N-Period deviation of the OBV data and displays it as a histogram. This is overlayed on an area chart of the M-Period SMA of the histogram data. This combination helps to visually enhance the pattern that signifies that a jump in price is about to happen.
Useage:
Useage:
- When the histogram bars are above the area plot, then a jump in price is about to happen
- As with all leading indicators, there are a lot of false signals. Confirm with price action or another indicator
- The further the histogram bars are above the area plot, the larger the predicted jump in price
- It seems to work better on shorter intraday timeframes than on the longer timeframes
- At the close of a market session, it is a good indicator of how much the price will jump on the opening of the next market session.
Open-source script
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in publication is governed by House rules. You can favorite it to use it on a chart.
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