Confluence Identifier

Modified on Thu, 28 Aug at 3:28 AM

The Confluence Identifier of VolSys enables automatic identification of supports and resistances generated from multiple Volume Profile types and price action trends. Specifically, by combining Volume Poc, Value Areas, Peaks, Valleys of different Volume Profiles along with swing highs and lows, the indicator identifies confluence zones that can act as areas of support and resistance.

INDEX

Settings-of-Use
Settings-of-Data
Setup Confluences
Zig Zag Swing
First/Second/Third-VBP
Enable Retracements-Trend
- Enable Retracements
- Exclude Previous Retracements
Dynamic
Color Support/Resistance

Settings-of-Use

Clicking on the'indicator settings icon, the corresponding configuration window will open, within which it will be possible to make various choices regarding the indicator's functions.

Data-Setup

Data-Base

Defines the data base to be used in the calculation of the indicator, being able to choose from:

1. Volume

Measures the amount of volume exchanged;

2. Order

It measures the number of orders placed;

Filter Min

Allows you to apply a minimum filter to the'indicator;

Filter Max

Allows you to apply a maximum filter to the'indicator, if the value 0 is left no maximum filter will be applied;

Settings Confluences

Sensitivity-Tick

Settings Confluences; Tick

Defines the tick range for the calculation of confluences, specifically, the indicator will'combine the values provided by the Volume Profiles and the swings generated by Price Action that converge in the defined tick range.

Minimum Number-of-Confluences

Defines the minimum number of confluences that you want to identify. Logically, the higher this value, the fewer confluence zones will be identified, the zones identified will be però more virtuous.

Start Mode

Defines which mode to start with to calculate confluences:

1. Zig Zag

The calculation of confluences is based on zig zag;

2. Date

Calculation of confluences is based on a specific date;

Start Date

Defines the date from which to start calculating confluences.

% absolute-variation-for-reversal-zig-zag

Defines the price reversal parameter for determining a swing, as sufficient price movement in the opposite direction from the current trend will be needed to determine the reversal and identify a new swing.

Number-of-swings

Defines the number of swings from which to begin calculating confluences.

Zig Zag Swing

% absolute-variation-for-inversion-zig zag

Defines the price reversal parameter to determine a swing.

While the first zig zag is eventually used to calculate the date from which to start calculating confluences and therefore; a sufficiently large parameter can be used, the latter is used to determine the swings that act as confluences, so it is recommended to use a smaller parameter, so that minor swings are also taken into account.

Enable Zig Zag Swing

If enabled the l'indicator will goà to include swing highs and lows in the confluence calculation.

Include swing in the first-half;

If enabled the indicator will go to include the swing highs and lows that are part of the first halfà of the considered section, that is, the least recent swing points, if disabled only the most recent ones will be considered.

To better understand these settings, look at the image below. In the example we enabled only zig zag swings, so the indicator bases the calculation of confluences only on price action. The gray vertical line marks the beginning of the confluence calculation, and is based on the last 9 swings with an absolute change of 3%, see Green and Red Zig Zag. While the swings for the confluence calculation are based on a Zig Zag with an absolute change of 1%, see Gray Zig Zag.

The indicator will go to signal confluences, in green for resistances and in red for supports, if there are at least 3 price swings with a sensitivity of 5 ticks.

First/Second/Third VBP

In these sections you can enable up to three different Volume By Price

Enable

Enables you to enable the Volume Profile

Setting

Defines Volume Profile settings:

Profile Settings

Allows you to choose the type of VBP length, being able to choose from: Daily, Weekly, Monthly and All Bars (Composite)

Also, è you can choose whether to group ticks, set filters for minimum volume of Peaks and maximum volume of Valleys and define other settings.

Enablements

Enables POC, Value Area, Peak, Valley and Imbalance delta for calculating confluences.

Visual Appearance

Enables color change thickness and line style of the values seen above.

Include-by-number

If enabled only a user-defined number of VBPs are considered, otherwise all VBPs from the date of the confluence calculation are considered.

Number of Profiles

Defines the number of profiles to be considered by enabling the previous option.

Continuing the example seen earlier, if the Weekly Volume Profiles are added to the price action swings the indicator will detect additional confluences. The more the color of the labels provided by the indicator is understood, the more a price level will be rich in confluences.

Enable Trend Retracements

Enable Retracements

Enable main swing retracements and add levels of 38.2%, 50%, 61.8%, and 75% to the calculation of confluences.

Exclude previous retracements

If enabled it allows you to exclude previous swing retracements, otherwise it also considers that swing in the calculation.

Dynamic

In this section è you can show the Zig Zag lines, as well asé change their color, differentiating between bullish and bearish swings.

Color Support/Resistance

Define the colors of supports and resistances being able to differentiate by the number of confluences.

As the number of elements considered as confluence calculation increases, it is recommended to be more selective in the confluence settings so that only the most virtuous price areas can be highlighted. For example, in the image below, having enabled in addition to price swings the values derived from three different Volume Profiles (daily, weekly and Composite), along with the retracements of the last swing, highlighted the price areas with a minimum of 5 confluences and 3 ticks of sensitivity.

In addition, if you want more cleanliness in the chart you can disable the lines derived from the VBPs as done in the example in the figure, where Volume Profile distributions were then added with apparte indicators.