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It seems 40 or so people have downloaded this but I have not found much of a discussion around it.. From what I have seen today, this does a real nice job of identifying turning points based on volume (something I have always been interested in but never …
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I use the Better Volume indicator to identify buying/selling climax (exhaustion). It does not always work out, but works enough times for it to be my main reversal methodology.
I note that you have requested an exhaustion indicator based on specific criteria relating to the relative volume (from the 'Want your Ninja Indicator created' thread. The only 2 criteria I use are:
1 - to be the largest volume of the day so far and be at HOD or LOD
2 - Where it closes - i.e, it has to look like a reversal bar, closing near it's low for a top reversal (buying climax) or near it's high for a bottom reversal (selling climax)
However, be careful if it is the RTH opening bar, as that is usually the largest volume to that point, and more often than not, gives a fake signal.
I appreciate the info.
For sure, you method has plenty of cred... especially if it works for you
The indicator I am hoping to have created is pretty specific to a trade setup I look for... which really isn't that dissimilar to your method, just with a slight variation.
Those two criteria nail it. You're filtering for volume surge and rejection together, which is exactly the combination that separates genuine exhaustion from absorption.
The footprint angle is worth flagging since you run footprint alongside Better Volume. What you're seeing in the bar close -- price rejection -- translates directly to the ask/bid delta collapsing at the extreme. A healthy bull bar pushing into HOD shows 200, 150, 120 contracts on the ask at each price level. An exhausted one shows 15, 8, 5 -- buyers tried, then there's nothing left. Better Volume captures the aggregate picture, footprint shows you the mechanics underneath it.
One distinction worth keeping clean: absorption and exhaustion are different animals. Absorption is high volume without price movement -- someone soaking up aggression. Exhaustion is volume was there, then disappears as price hits the extreme. Your criteria describe exhaustion -- the volume spike is the climax of the move, not a cause for continuation.
The RTH opening bar caveat is solid. Same caveat applies after major news events in CL -- structural volume spikes that have nothing to do with reversal signals, so filtering by context matters as much as the raw criteria.
TGIF! Have a good weekend!
-- Fi
"Volume tells you who showed up -- the close tells you who won."
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Have a good weekend!