Enhanced Buy/Sell Pressure, Volume, and Trend Bar analysis

7 Nov

Enhanced Buy/Sell Pressure, Volume, and Trend Bar Analysis Indicator


Overview

This indicator is designed to help traders identify buy and sell pressure, volume changes, and overall trend direction in the market. It combines multiple concepts like price action, volume, and trend analysis, candlestick anaysis to provide a comprehensive view of market dynamics. The visual elements are intuitive, making it suitable for traders at different levels. This indicator works together with Enhanced Pressure MTF Screener which is a screener based of this indicator to make it easier to see Bullish/Bearish pressures and trend across multiple timeframes.

Image below: is the Enhanced Buy/Sell Pressure, Volume, and Trend Bar Analysis with the Enhanced Pressure MTF Screener indicator both active together.



Key Features

1.Buy/Sell Pressure Identification

Buy Pressure: Calculated based on price movement where the close price is higher than the opening price.



Sell Pressure: Calculated when the closing price is equal to or lower than the opening price.These pressures help you understand whether buyers or sellers are more dominant for each bar.



2.Volume Analysis

• Normalized Volume: Volume data is normalized, making it easier to compare volume levels over different periods.
  

• Volume Histogram: The volume is also presented as a histogram for easy visualization, showing whether the current volume is higher or lower compared to the average.
  

3.Simplified Coloring Option

• You can choose to simplify the coloring of bars to reflect the dominant pressure: green for bullish pressure and red for bearish pressure. This makes it visually easier to identify who is in control. When simplified coloring is disabled, the bars' colors will represent the combined effect of buy and sell pressure.
  

4.Heikin-Ashi Candles for Pressure Calculation

• The indicator includes an option to use Heikin-Ashi candles instead of traditional candles to calculate buy and sell pressure. Heikin-Ashi candles are known for smoothing out price action and providing a clearer trend representation.
  

5.Trend Background Coloring

• This feature uses exponential moving averages (EMAs) to determine the trend:

• Short-Term EMA vs. Long-Term EMA: When the short-term EMA is above the long-term EMA, the trend is considered bullish, and vice versa.
  

• The background color changes based on the identified trend: green for an uptrend and red for a downtrend. This feature helps visualize the overall market direction at a glance.
  

6.Signals for Key Price Actions

• The indicator plots various symbols to signal important price movements:

• Bullish Close (▲): Indicates a strong upward movement where the close price crosses above the open.
  
• Bearish Close (▼): Indicates a downward movement where the close price falls below the open.
  
• Higher High (•): Highlights new highs compared to previous bars, useful for confirming an uptrend.
  
• Lower Low (•): Highlights lower lows compared to previous bars, which can indicate a downtrend or bearish pressure.
  

Calculations Explained

1.Buy and Sell Pressure Calculation

• The buy pressure is determined by the price range (high - low) if the closing price is above the opening price, indicating an increase in value.
  

• The sell pressure is similarly calculated when the closing price is equal to or below the opening price.
  

• The indicator uses the Average True Range (ATR) for normalization. Normalizing helps you compare pressure across different periods, regardless of market volatility.
  

2.Volume Normalization

• Volume Normalization: To make volume comparable across different periods, the indicator normalizes it using the Simple Moving Average (SMA) of volume over a user-defined length.
  

• Volume Histogram: The histogram provides a clear representation of volume changes compared to the average, making it easier to spot unusual activity that may indicate market shifts.
  

3.Combined Pressure Calculation

• The indicator calculates a combined pressure value by subtracting sell pressure from buy pressure.
  

• When combined pressure is positive, buying is dominant, and when negative, selling is dominant. This helps in visually understanding the ongoing momentum.
  

4.Trend Calculation
The indicator uses two EMAs to determine the trend:

• Short-Term EMA (default 14-period) to capture recent price movements.
  
• Long-Term EMA (default 50-period) to provide a broader trend perspective.
  

• By comparing these EMAs on a higher timeframe, the indicator can identify whether the trend is up or down, making it easier for traders to align their trades with the larger market movement.
  

Inputs and Customization
The indicator provides several options for customization, allowing you to adjust it to your preferences:

• SMA Length: Determines the lookback period for moving averages and volume normalization. A longer length provides more smoothing, whereas a shorter length makes the indicator more responsive.
  
  
• Buy/Sell/Volume Colors: Customize the colors used to represent buying, selling, and volume to suit your preferences.
  
  
• Heikin Ashi Option: Toggle between using Heikin Ashi or traditional OHLC (Open-High-Low-Close) candles for pressure calculations.
  
  
• Trend Timeframe and EMA Periods: You can choose different timeframes and EMA periods for trend analysis to suit your trading strategy.
  

How to Use This Indicator

• Identifying Market Momentum: Use the buy/sell pressure columns to see which side (buyers or sellers) is in control. Positive pressure combined with green color indicates strong buying, while red indicates selling.
  
  
• Volume Confirmation: Check the volume area plot and histogram. High volume coupled with strong pressure is a sign of conviction, meaning the current move has backing from market participants.
  
  
• Trend Identification: The trend background color helps identify the overall trend direction. Trade in the direction of the trend (e.g., take long positions during a green background).
  
  
• Signal Indicators: The plotted symbols like "Bullish Close" and "Bearish Close" provide visual signals of key price actions, useful for timing entry or exit points.
  
  

Practical use Example

• Scenario: The market is consolidating, and you see alternating green and red bars.
  

• Action: Wait for a consistent sequence of green bars (buy pressure) along with a green background (uptrend) to consider going long, although you can go long without having a green background, the background adds confirmation layer.
  

• Scenario: The market has several bearish closes (red ▼ symbols) accompanied by increasing volume.
  

• Action: This could indicate strong selling pressure. If the background also turns red, it might be a good time to exit long positions or consider shorting.
  

• Higher timeframe pressure and volume: Another way to use the indicator is to check buy/sell volume and pressure of the higher timeframe say weekly or daily or any timeframe you consider higher, once you’ve identified or feel confident in which direction the bar is going along with the full picture of trend, you can go to the lower timeframe and wait for it to sync with the higher timeframe to consider a long or a short. It is also easier to see when markets sync up by also applying the Enhanced Pressure MTF Screener which works in companion to this indicator.
  

Visual Cues and Interpretation

• Combined Pressure Plot: The green and red column plot at the bottom of the chart represents the dominance between buying and selling. Tall green bars signify strong buying, while tall red bars indicate selling dominance.
  
  
• Trend Background: Helps visualize the overall direction without manually drawing trend lines. When the background turns green, it generally indicates that the shorter-term moving average has crossed above the longer-term average—a sign of a bullish trend.
  
  

To Summarize shortly

The Enhanced Buy/Sell Pressure, Volume, and Trend Bar Analysis Indicator is an advanced but simple tool designed to help traders visually understand market dynamics. It combines different aspects of market analysis of candle pressure from buyers and sellers, volume confirmation, and trend identification into a single view, which can assist both new and experienced traders in making informed trading decisions.

This indicator:

• Saves time by simplifying market analysis.
  
• Provides clear visual cues for buy/sell pressure, volume, and trend.
  
• Offers customizable settings to suit individual trading styles.
  

Always, I am happy to share my creations with you all for free. If you guys have cool ideas you would like to share, or suggestions for improvements the comment is below and I hope this overview gave an idea of how to use the indicator :D