Normalized Volume Zone [Orderflowing]

21 Nov 2023

Normalized Volume Zone | Normalized VZO | Volume Analysis | Normalization (+) | Customizable (+)
Built using Pine Script V5.

Introduction
The Normalized Volume Zone is an indicator rooted in the classic VZO concept, this indicator takes a step further by normalizing the volume data.
Ideal for traders who rely heavily on volume data and seek a normalized dataset to interpret volume trends and signals.

Inspiration and Innovation
The tool builds upon the foundational concepts of the Volume Zone Oscillator (VZO), introduced by Walid Khalil and David Steckler.
This indicator enhances the traditional VZO by introducing advanced normalization calculations, offering traders a new approach to volume-based market analysis.

Core Features

• Calculation Sources: Choose from HLC3, OHLC4, close, or open for VZO calculations.
  
• Customizable Periods: Set your preferred periods for VZO calculation, MA length, and percentile lookback, the indicator bends to your trading style.
  
• Advanced Smoothing Options: Select from a range of smoothing methods like HMA, Fourier, SMA, EMA, WMA, DEMA, and TEMA for the VZO line.
  
• Normalization Techniques: Apply normalization methods such as Percentile, Min-Max, Z-Score, or Log to the VZO data.*
  
• Visual Enhancements: Color-coded VZO and MA lines, along with optional dots for significant changes, provide clear visual cues for easier interpretation.
  
• Multi-Timeframe: Can be used on different timeframes for calculation.
  

*Some of the normalization methods require that you change the length of smoothing.


Example of Multi-Timeframe (4H Calculation on 30M Chart):

Example of HMA Smoothing & Z-Score Normalization:


Functionality

• Normalization: The indicator normalizes the smoothed VZO data, making it more consistent and comparable across different trading scenarios.
  
• Visual: The color changes in the VZO and MA lines, along with the optional dots, offer dynamic visual feedback on market conditions.
  

Usage and Applications

• Volume Trend Analysis: The normalized VZO provides a good picture of volume trends, helping traders identify potential reversals or continuation patterns.
  
• Comparative Analysis: Normalization allows for more meaningful comparisons of volume data across different instruments or time frames.
  
• Risk Management: Use the indicator to filter instrument strength and volatility.
  

Conclusion
The Normalized Volume Zone indicator stands as a great indicator in volume-based trading analysis.
By normalizing the data, it offers traders a custom view of the volume oscillation.
This indicator is particularly valuable for those who prioritize volume in their analysis, providing a good view of market strength and momentum.

It is important to remember that while this indicator offers volume analysis, it is not recommended to only use this for trading decisions.

17 Ogo 2024

Nota Keluaran

V1.1 - Reworked Inputs Section.
Reworked Divergence Logic.
Added Toggle Option For Visualizing VZO Trend Shift.
Added Band Visual Option.

17 Feb

Nota Keluaran

V1.2 - Pine Script™ v6 Update