HumbleDumbell

Objective Analysis of Spread (VSA)

Note: Pardon for a busy chart. It really is irrelevant for this indicator. Just look at the bottom part of the chart for the indicator (SpAn).

This script is meant to add objectivity to the estimation of spread in VSA. This is best used with a similar volume indicator that measures volume in the same fashion, but a simple rule of "higher/lower than the previous 2 bars" for estimation of volume size can be used as well in conjunction with this indicator.

A 30-period (adjustable) SMA difference between the high and the close is used to estimate average spread. This value is used to plot bands of 0.8 and lower (blue) standard deviation for narrow spread, 0.8-1.3 (yellow) for medium spread, 1,3-1.8 (green) for wide spread, 1.8-3 (red) for ultra-wide spread. Anything above 3 (no color) is plain crazy. =)

How to use:
A histogram of each bar spread is plotted as well. See where each histogram bar ends. For example, if it ends in the green area, this bar has a wide spread.

Added indicator:
An ATR (14-period, adjustable) is plotted as a black line for your reference. May be used for stops. Otherwise, it is not necessary for VSA.

Feedback and suggestions for improvement are welcome.

Release Notes: This version added:

1. Spread histogram consists of 2 colors: Black for spread of the current bar (true range) and Orange for body only spread.
2. Color background shows where the spread of the current bar falls in relation to a simple moving average of the spread (14 period, adjustable). The blue zone is 0.8 of the spread SMA or lower (very low spread), yellow for 0.8 and 1.3 of the SMA (normal spread), green for 1.3 and 2 of the SMA (high spread, healthy), red for 2 and 3 (very high spread). Anything above red can be considered ultra wide spread.
3. Black line for ATR.

Not all information may be important for developing a trading strategy, but for pure spread analysis (even if only theoretical) every bit of information on display is useful when coupled with volume analysis and analysis of bar shapes.
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Comments

hi humble where to find this
Reply
@aahsan, Hi, sorry for the late reply. Didn't notice any notification for the comment. Could you please rephrase your question? What do you mean by "this"?
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Gosh, I forgot that TradingView is using my current screen as a screenshot. Please ignore what you see on the screen. The indicator is mixed with a volume indicator, so it's super confusing...
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is there a way, if not already, to be warned of market low volume testing?
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@dee718, None that I know of on tradingview. There are commercial indicators on other platforms, though. I have been trying to code something like this into another indicator of mine adapting it to the btc market, but it takes a lot of time as I am not doing any automated backtesting and am literally testing it manually as time goes.
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dee718 HumbleDumbell
@HumbleDumbell, ah okay.. thanks!!
Reply
dee718 HumbleDumbell
@HumbleDumbell, The lazy bear support and resistance volume indicator is actually really useful in ID'ing tests/strength/weakness if you do VSA/Wyckoff.. i think its free for a month and then you have to subscribe. FYI.. Thanks again sir!
Reply
@dee718, Thanks. I will take a look. I am more of a DIY person, but I always learn from others)
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dee718 HumbleDumbell
@HumbleDumbell, Yea, that stuff is outside my pay grade.. but I think with some adjustments it would be really powerful. I think its an entire indictor suite that has S/R levels for Volume, RSI, MFI etc depending on your preference.
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@dee718, I am trying to code something simpler. More of an easy-to-look-at indicator that draws your attention to important points and forces you to come up with your own move based on that. It has no inherent strategy to it. If I find it useful, I will probably post it here after testing it a bit more. It won't remove the need to know VSA and how it is supposed to be used.
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