This is my 1st indicator enjoy. Description of the VWAP Supply and Demand Zones indicator:
This indicator uses the Volume Weighted Average Price (VWAP) to identify potential supply and demand zones in the market. The VWAP is a popular indicator that shows the average price of a security weighted by volume over a specified period of time. It can be used as a benchmark to measure the efficiency of trading and to identify trends and price levels.
The indicator plots the VWAP as a blue line on the chart, and also plots two other lines above and below it, which represent the upper and lower bounds of the supply and demand zones. The width of these zones can be adjusted by changing the “Zone Width” input parameter.
The indicator also plots shapes on the chart to mark when a supply or demand zone is formed. A supply zone is formed when the price crosses above the VWAP and then falls back below it, indicating that there is more selling pressure than buying pressure at that level. A red triangle is plotted above the bar where this happens, and a red zone is drawn between the previous close and previous VWAP values.
A demand zone is formed when the price crosses below the VWAP and then rises back above it, indicating that there is more buying pressure than selling pressure at that level. A green triangle is plotted below the bar where this happens, and a green zone is drawn between the previous close and previous VWAP values.
The supply and demand zones can be used as potential areas of support and resistance, where traders can look for reversal or continuation signals. For example, if the price enters a supply zone from below, it may indicate that sellers are willing to sell at higher prices, which could lead to a bearish reversal. Conversely, if the price enters a demand zone from above, it may indicate that buyers are willing to buy at lower prices, which could lead to a bullish reversal.
The indicator can be applied to any timeframe or market, but it may work better on higher timeframes where volume data is more reliable. It can also be combined with other indicators or tools to confirm or filter signals.
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In this update we changed the signals to a background color of red and green. Visually this works a lot better on the charts for lower timeframes. Also added alerts for supply and demand zones. Thanks for using and good luck trading.
@johngamel thank you again for sharing this script. I am not seeing the shapes on the chart when the supply and demand zone is formed. I am also not seeing the line above the blue line nor the one below it only the blue line itself. I was wondering if you had heard of anyone else having these issues? Thanks!
This script has been updated to make it suitable for all timeframes with alerts. Good luck happy trading.
johngamel
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Hi everyone I would use 1hr or above, but could go down to 5m. Also use a good volume indicator like the Bull Bear Power Void by coffeeshop crypto which is amazing. After a long trend up or down look for 3 triangles the other way. Good luck happy trading.