OPEN-SOURCE SCRIPT
volatility-weighted price change divergence
EMA of intrabar-volatility-weighted price change minus EMA of price change. It puts more weights on candles that have large volatility inside, and assumes that the direction of those high-volatility candles are more meaningful than low-volatility ones. Therefore, we take the difference between the volatility-weighted price change and the regular price change and plot the EMA. The indicator may be used as a tool to find divergence and potential reversal, or hints of continuation of a strong trend. Note that this indicator can change a lot with different time frames and settings, so take care to backtest before using. Recommended settings are 15m resolution for time frames longer than 4H and 1m resolution (with 200 EMA length) for time frames below 4H. The resolution is used to find the intrabar volatility.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.