OPEN-SOURCE SCRIPT

Price Action & Volume Coherence Analyzer

**Price Action & Volume Coherence Analyzer - Advanced Market Analysis Tool**

This indicator analyzes the relationship between price action and volume, identifying when market movements are efficient or conflicting, helping traders understand the quality of price moves.

**What This Script Does:**

This indicator combines price action analysis with volume coherence detection through a proprietary correlation algorithm:

**1. Price Action Classification System:**
- Analyzes candle body strength (% of range occupied by body)
- Evaluates close position (upper, middle, or lower third of candle)
- Classifies each candle into 4 categories:
- Strong Bullish (large body + close near top + high volume)
- Weak Bullish (small body or close not at top)
- Strong Bearish (large body + close near bottom + high volume)
- Weak Bearish (small body or close not at bottom)
- Optional volume confirmation for enhanced accuracy

**2. Volume-Price Coherence Detection:**
- Compares current volume to historical average
- Compares price range to historical range average
- Calculates coherence ratio: Normalized Range / Normalized Volume
- Identifies market efficiency:
- High coherence (>1.5): Good price movement relative to volume
- Normal coherence (~1.0): Balanced volume-price relationship
- Low coherence (<0.7): Congestion or high volume with little price movement

**3. Visual System:**
- Color-coded candles for instant pattern recognition
- Background highlighting for extreme coherence conditions
- Status bar displaying numerical coherence value
- Alert system for abnormal conditions

**How It Works:**

1. **Candle Analysis**: Evaluates body strength and close position
2. **Volume Analysis**: Normalizes volume against 20-period average
3. **Range Analysis**: Normalizes price range against 20-period average
4. **Coherence Calculation**: Creates ratio revealing volume-price efficiency
5. **Visualization**: Colors candles and background based on conditions
6. **Alerts**: Notifies when coherence becomes extreme

**Key Calculations:**

- Body Ratio = (Candle Body / Candle Range) × 100
- Close Position = (Close - Low) / (High - Low)
- Volume Normalized = Current Volume / Volume Average
- Range Normalized = Current Range / Range Average
- Coherence = Range Normalized / Volume Normalized

**Parameters:**

- **Strong Body Threshold (%)**: Minimum body % to classify candle as strong (default: 60%)
- **Use Volume in Colors**: Enable volume confirmation for classification (default: ON)
- **Average Period**: Lookback period for calculating averages (default: 20)
- **Show Background Alerts**: Highlight extreme coherence on chart (default: ON)
- **Base Equilibrium Value**: Reference point for coherence (default: 1.0)

**Use Cases:**

1. **Traders**: Identify high-quality price moves with adequate volume support
2. **Swing Traders**: Detect reversals when coherence diverges from volume
3. **Scalpers**: Find efficient entry points with strong volume confirmation
4. **Analysts**: Understand market efficiency and trader intent
5. **Risk Managers**: Spot potential manipulation or institutional activity

**Color Coding:**

- **Green Candles**: Strong bullish (large body, close at top)
- **Light Green**: Weak bullish (small body or close not at top)
- **Red Candles**: Strong bearish (large body, close at bottom)
- **Light Red**: Weak bearish (small body or close not at bottom)
- **Gray**: Doji patterns (open = close)
- **Green Background**: Efficient movement (high coherence >1.5)
- **Red Background**: Congestion (low coherence <0.7)

**Originality Statement:**

This script's core algorithm—the volume-price coherence correlation system—is original work. While price action and volume analysis concepts are well-known, this specific implementation that simultaneously evaluates body strength, close position, volume normalization, and range normalization to produce a coherence ratio represents a unique analytical approach not available in standard indicators.

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סקריפט קוד פתוח

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