Indicators: Volume Zone Indicator & Price Zone Indicator by LazyBear

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Volume Zone Indicator (VZO) and Price Zone Indicator (PZO) are by Waleed Aly Khalil.

Volume Zone Indicator (VZO)
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VZO is a leading volume oscillator that evaluates volume in relation to the direction of the net price change on each bar.

A value of 40 or above shows bullish accumulation. Low values (< 40 ) are bearish . Near zero or between +/- 20, the market is either in consolidation or near a break out. When VZO is near +/- 60, an end to the bull/bear run should be expected soon. If that run has been opposite to the long term price trend direction, then a reversal often will occur.

Traditional way of looking at this also works:
* +/- 40 levels are overbought / oversold
* +/- 60 levels are extreme overbought / oversold

More info:

Price Zone Indicator (PZO)
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PZO is interpreted the same way as VZO (same formula with "close" substituted for "volume").

Chart Markings
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In the chart above,
* The red circles indicate a run-end (or reversal) zones (VZO +/- 60).
* Blue rectangle shows the consolidation zone (VZO betwen +/- 20)

I have been trying out VZO only for a week now, but I think this has lot of potential. Give it a try, let me know what you think.

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 a publication is governed by House Rules. You can favorite it to use it on a chart.

Want to use this script on a chart?

//
// @author LazyBear
//
// If you use this code in its original/modified form, do drop me a note. 
//
study("Volume Zone Oscillator [LazyBear]", shorttitle="VZO_LB")
length=input(20, title="MA Length")

dvol=sign(close-close[1]) * volume
dvma=ema(dvol, length)
vma=ema(volume, length)
vzo=iff(vma != 0, 100 * dvma / vma,0)

hline(60, color=red)
hline(40, color=gray)
hline(20, color=gray)
hline(0, color=gray)
hline(-20, color=gray)
hline(-40, color=gray)
hline(-60, color=green)

plot(vzo, color=maroon, linewidth=2)

List of my free indicators: http://bit.ly/1LQaPK8
List of my indicators at Appstore: http://blog.tradingview.com/?p=970

Related Ideas

Comments

tell me please ... where can I get this indicator?

Great thinking! Great indicator! Great work LazyBear!
Can you add one more function to show the situation in which there is a second sharp dip(B) in the vzo which is higher than the front sharp dip(A), but at the same time the second price(B) is lower than the front price(A)
Please check the image, Thanks.

chenchen3529

That is basically the divergence detector. We can hack up a fixed-period lookback divergence detector, but will need more Pine constructs to do this cleanly.

Lazy Bear Re: A strategy using VZO and PZO. I stumbled across this link: http://files.meetup.com/81355/VZO-PZO%20articles.pdf. The 2 articles written by Walid Khalil and David Steckler describe a strategy for using VZO and PZO. It seems to me that it might be interesting to plot PVO and VZO together using the same look back period to help visualize some of the aspects described in the papers. I have been playing a bit with your VZO script. Thanks for this and the many other scripts you have written.
Jayy

jayy

Thanks for the info. Looks like you already merged them both in to the same pane, if not do let me know. Thanks again.

Thank you for your work. I would like to request adding an adjustable moving average,

Great as usual, love your work!

Fahrenheit

Thanks

Very nice