Overview
The Volume Orderbook indicator is a volume analysis tool that visually resembles an order book. It aggregates and displays historical trading volume at different price levels, highlighting areas of high and low activity. Unlike real-time order books, it focuses on past trading data to identify key support/resistance zones.
Key Features
1. Visual Representation
- Displays cumulative trading volume as horizontal bars at each price level.
- Thicker bars indicate higher trading activity (liquidity zones).
2. Calculations
- Volume Zones: The algorithm sums volume traded within specific price ranges.
- Bar Thickness: Reflects the breadth of the price zone and the volume concentrated there.
3. How to Use
- Identify Key Levels: High-volume nodes suggest strong support/resistance.
- Breakout Validation: Prices moving beyond high-volume zones may signal trend strength.
- Market Psychology: Volume distribution reveals buyer/seller dominance.
Applications
Support/Resistance
- High-volume zones often act as pivot points where price reversals or consolidations occur.
Breakout Trading
- A close above/below a high-volume node confirms breakout validity.
Anomaly Detection
- Unusual volume spikes at atypical prices may indicate institutional activity or stop runs.
Settings Configuration
| Parameter | Function |
|-----------------|-------------------------------------------|
| Source | Price input (default: Close) |
| Rows/Width | Adjusts granularity of volume zones |
| Grid/Table | Customizes display layout |
FAQ
Q1: How does this differ from a real-time order book?
A: It uses historical data rather than live bids/asks, making it ideal for analyzing past liquidity levels.
Q2: Can it predict future price movements?
A: No, but it highlights probable reaction zones based on past volume activity.
Q3: Which markets is it best suited for?
A: Works well for liquid assets (e.g., Forex, Crypto, Stocks) with visible volume patterns.
SEO Keywords
- Volume analysis
- Orderbook indicator
- Support and resistance
- Breakout trading
- Liquidity zones