OPEN-SOURCE SCRIPT
CVD Matrix: Main Chart Signals
## CVD Candles: Absorption & Engulfing Overlay
> ### ⚠️ Critical Note Before Deployment
>
>
> Because the Forex market is decentralized, **volume data is entirely feed-dependent.** For this overlay to function properly, you **must** ensure your chosen asset or currency ticker provides volume/tick volume data on TradingView. If the broker feed lacks volume data, the Cumulative Volume Delta (CVD) engine will render flat lines or fail to calculate entirely.
> Highly recommended feeds on TradingView that provide robust, institutional-grade volume metrics include:
> * **OANDA**
> * **FOREX.com**
> * **FXCM**
> * **ICE** (For spot and currency futures feeds)
>
>
---
### Overview
The **CVD Candles: Absorption & Engulfing Overlay** is an institutional-grade order flow and market structure toolkit designed to isolate hidden market participant activity. By pairing **Cumulative Volume Delta (CVD)** divergences with localized price pivots, this indicator filters out retail noise and exposes areas where large market players are actively absorbing aggressive order flow.
Rather than relying purely on lagging price action, this system demands explicit cross-verification between structural order flow exhaustion and a high-volume momentum breakout before printing highly actionable trade entries directly onto your main price candles.
---
### Key Mechanics & Features
### 1. Structural Order Flow Absorption (The Diamonds)
The indicator continuously monitors localized market structure using a customizable Pivot Engine. When price forms a swing high or swing low, the system evaluates the internal order flow inside a precise **CVD Window Offset**.
* **Bullish Absorption (Teal Diamond):** Occurs when price forms a higher low (or equal low), but the CVD drops to a significant lower low. This reveals aggressive sellers hammering the market, yet price refuses to drop—proving that passive institutional buy orders are completely absorbing the selling pressure.
* **Bearish Absorption (Orange Diamond):** Occurs when price forms a lower high (or equal high), but the CVD spikes to a significant higher high. This reveals aggressive buyers chasing price upward, yet price refuses to break higher—proving that passive institutional sell orders are absorbing the buying pressure.
### 2. High-Volume Momentum Confirmation (The Bull/Bear Entries)
An absorption signal alone is simply a sign of a stopping market; it requires a volatility catalyst to become a valid entry. Once an absorption diamond is confirmed, the indicator activates an internal tracking engine that stays live for a customizable **Entry Window** (e.g., 4 bars).
To trigger a **BULL ENTRY** or **BEAR ENTRY** label, the market must satisfy two strict momentum filters within that window:
* **Volume Expansion:** Current volume must exceed the previous bar's volume *and* cross above the 10-period Volume SMA, ensuring genuine institutional participation.
* **Price Engulfing:** Price must print a decisive engulfing candle or strong Marubozu close variant, confirming that the absorbing party has successfully taken control of the market and initiated the reversal.
---
### How to Trade the Overlay
* **The Setup:** Look for a **Teal** or **Orange Diamond** to print on your main chart. This signals that a major structural turning point has been identified and order flow is shifting.
* **The Execution:** Wait for the system to print a **BULL ENTRY** or **BEAR ENTRY** label. Because these labels require a volume-backed engulfing candle to fire, they mark the exact moment aggressive momentum has shifted in favor of the absorbing institution.
* **Invalidation:** If the market drifts sideways and fails to produce a high-volume engulfing breakout within your specified entry window, the tracking engine automatically resets to protect you from entering a choppy, low-liquidity environment.
> ### ⚠️ Critical Note Before Deployment
>
>
> Because the Forex market is decentralized, **volume data is entirely feed-dependent.** For this overlay to function properly, you **must** ensure your chosen asset or currency ticker provides volume/tick volume data on TradingView. If the broker feed lacks volume data, the Cumulative Volume Delta (CVD) engine will render flat lines or fail to calculate entirely.
> Highly recommended feeds on TradingView that provide robust, institutional-grade volume metrics include:
> * **OANDA**
> * **FOREX.com**
> * **FXCM**
> * **ICE** (For spot and currency futures feeds)
>
>
---
### Overview
The **CVD Candles: Absorption & Engulfing Overlay** is an institutional-grade order flow and market structure toolkit designed to isolate hidden market participant activity. By pairing **Cumulative Volume Delta (CVD)** divergences with localized price pivots, this indicator filters out retail noise and exposes areas where large market players are actively absorbing aggressive order flow.
Rather than relying purely on lagging price action, this system demands explicit cross-verification between structural order flow exhaustion and a high-volume momentum breakout before printing highly actionable trade entries directly onto your main price candles.
---
### Key Mechanics & Features
### 1. Structural Order Flow Absorption (The Diamonds)
The indicator continuously monitors localized market structure using a customizable Pivot Engine. When price forms a swing high or swing low, the system evaluates the internal order flow inside a precise **CVD Window Offset**.
* **Bullish Absorption (Teal Diamond):** Occurs when price forms a higher low (or equal low), but the CVD drops to a significant lower low. This reveals aggressive sellers hammering the market, yet price refuses to drop—proving that passive institutional buy orders are completely absorbing the selling pressure.
* **Bearish Absorption (Orange Diamond):** Occurs when price forms a lower high (or equal high), but the CVD spikes to a significant higher high. This reveals aggressive buyers chasing price upward, yet price refuses to break higher—proving that passive institutional sell orders are absorbing the buying pressure.
### 2. High-Volume Momentum Confirmation (The Bull/Bear Entries)
An absorption signal alone is simply a sign of a stopping market; it requires a volatility catalyst to become a valid entry. Once an absorption diamond is confirmed, the indicator activates an internal tracking engine that stays live for a customizable **Entry Window** (e.g., 4 bars).
To trigger a **BULL ENTRY** or **BEAR ENTRY** label, the market must satisfy two strict momentum filters within that window:
* **Volume Expansion:** Current volume must exceed the previous bar's volume *and* cross above the 10-period Volume SMA, ensuring genuine institutional participation.
* **Price Engulfing:** Price must print a decisive engulfing candle or strong Marubozu close variant, confirming that the absorbing party has successfully taken control of the market and initiated the reversal.
---
### How to Trade the Overlay
* **The Setup:** Look for a **Teal** or **Orange Diamond** to print on your main chart. This signals that a major structural turning point has been identified and order flow is shifting.
* **The Execution:** Wait for the system to print a **BULL ENTRY** or **BEAR ENTRY** label. Because these labels require a volume-backed engulfing candle to fire, they mark the exact moment aggressive momentum has shifted in favor of the absorbing institution.
* **Invalidation:** If the market drifts sideways and fails to produce a high-volume engulfing breakout within your specified entry window, the tracking engine automatically resets to protect you from entering a choppy, low-liquidity environment.
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Em verdadeiro espírito do TradingView, o criador deste script o tornou de código aberto, para que os traders possam revisar e verificar sua funcionalidade. Parabéns ao autor! Embora você possa usá-lo gratuitamente, lembre-se de que a republicação do código está sujeita às nossas Regras da Casa.
Aviso legal
As informações e publicações não se destinam a ser, e não constituem, conselhos ou recomendações financeiras, de investimento, comerciais ou de outro tipo fornecidos ou endossados pela TradingView. Leia mais nos Termos de Uso.
Script de código aberto
Em verdadeiro espírito do TradingView, o criador deste script o tornou de código aberto, para que os traders possam revisar e verificar sua funcionalidade. Parabéns ao autor! Embora você possa usá-lo gratuitamente, lembre-se de que a republicação do código está sujeita às nossas Regras da Casa.
Aviso legal
As informações e publicações não se destinam a ser, e não constituem, conselhos ou recomendações financeiras, de investimento, comerciais ou de outro tipo fornecidos ou endossados pela TradingView. Leia mais nos Termos de Uso.