"The main idea of the VZO was to try to change the OBV to look like an oscillator rather than an indicator, also to include time; primarily to identify which zone the is located in during a specific period"
How to read this indicator:
- Positive reading ->
- Negative reading ->
- -60 or 60 is seen as the limit of the oscillator range, and a pullback should be expected from there.
- Plus and minus signs have been added to the top and bottom for VZO and PZO, with an adjustable threshold to trigger.
Alert conditions have been added to this indicator for ease of use.
Volume Zone Oscillator, write-up by the author (recommended reading)
Volume Zone Oscillator, uses and formula
Price Zone Oscillator, uses and formula
- Option to completely remove rows
-Added changeable source (where previously close was the only option)
-Removed PZO label alerts
-Moved VZO label alerts to the bottom of the indicator for visibility
-Changed + to mean oversold and - to mean overbought
-Removed 100/-100 levels
-Colors are mildly different
The reason for adding a changeable source is that a daily close that is positive vs. negative doesn't paint the price action that played out intraday. While not perfect, hl2 and hlc3 as a source seem to do a much better job; however, since nobody uses VZO with hl2 as source it would be wise to either check both sources or only use close to understand what other people are seeing.
- Clarified names of the alarms; you should more often than not be looking to use "VZO Overbought" or "VZO Oversold"
- +/- signs removed in favor of highlights. If you prefer the older version, it's located within the script.
- Added a moving average filter to price source. Its usage is mainly for lower timeframes where VZO jitters too much to be useful.
Possible values are none (default), Hull, exponential, and simple. There is an option to change its length. Keep in mind that longer values mean it is a smoother average but introduces heavy lag into the oscillator.
If you do decide to use a MA filter, it would be wise to stick to the same MA type and length. Cases where you would want to use different types are on different timeframes and different categories of trade.
- Removed RSI oscillator
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.
Sorry if I haven't replied to your message yet, I'm a bit backlogged :)