Wyckoff Effort vs. Result

📌 Wyckoff Effort vs. Result (E/R) – Visualizing Supply & Demand Imbalance with Volume Confirmation


📖 Overview

The Wyckoff Effort vs. Result (E/R) indicator is designed to help traders interpret market behavior through the lens of volume vs. price movement — a foundational concept in Richard Wyckoff’s methodology.

This tool aims to highlight moments where the “effort” (volume) is not in proportion to the “result” (price movement) — giving insight into potential accumulation or distribution events.

By detecting high-volume candles and classifying them based on their price direction, the indicator visualizes zones where smart money might be active.


⚙️ How It Works
1. Effort Accumulation (High Volume Down Bar):
• When a candle closes lower than it opens (down bar) and has above-average volume, it’s marked as potential absorption of selling pressure (effort to push down met by buying).
• These candles are colored red and the open level is plotted, acting as a potential support or re-test zone.
2. Effort Distribution (High Volume Up Bar):
• When a candle closes higher than it opens (up bar) and has above-average volume, it’s marked as potential distribution (effort to push up absorbed by sellers).
• These candles are colored green and the open level is plotted, acting as a potential resistance or rejection zone.
3. Average Volume Calculation:
• The script calculates a simple moving average (SMA) of volume over a user-defined lookback period.
• If current volume exceeds the average multiplied by a set threshold, it’s treated as a high-effort bar.


🧪 Inputs
Input Description
Average Volume Lookback - Number of bars used to calculate the volume average
High Volume Multiplier. - Multiplier to define what qualifies as “high volume”

🖥️ Visual Output
• 🔴 Red candles = High volume on a down bar → possible accumulation
• 🟢 Green candles = High volume on an up bar → possible distribution
• 📉 Horizontal lines at bar open price mark the potential zones where effort occurred

These zones can serve as:
• Areas of support/resistance
• Trap zones where smart money absorbs liquidity
• Entry/exit filters when combined with price action

🧠 How to Use
• Use in combination with price structure, support/resistance, and volume profile tools
• Watch how price reacts when it revisits the plotted lines
• Look for effort bars that fail to lead to continuation, signaling potential reversal
• Can be used in scalping, swing trading, or Wyckoff-style phase analysis


🔒 Technical Notes
• ✅ Does not repaint
• ✅ Built with Pine Script v6
• ✅ Lightweight and customizable
• ❌ Does not generate buy/sell signals — it provides context, not predictions