Delta Volume RSI

1. Introduction

The Delta Volume RSI (Relative Strength Index based on Volume Delta) indicator provides a unique perspective on market momentum by analyzing the average gains and losses of the volume delta—the difference between buying and selling volume—over a specified period. Unlike traditional RSI, which focuses on price changes, this indicator evaluates shifts in market participation intensity, helping traders detect periods of accumulation and distribution through volume action.

2. Key Features

- Volume-Based Calculation: Computes RSI using the average gains and losses of delta volume rather than price changes, offering insights into buying/selling pressure.
- Dynamic Color Coding: Paints the indicator line green when above the 50 level, and red when below, enabling quick visual identification of momentum shifts around neutrality.
- Reference Levels: Clearly displays overbought (70), neutral (50), and oversold (30) lines for context on volume-driven market extremes.
- Customizable Period: Users can set the period for RSI calculation to fit their trading style and timeframe preferences.

3. How to Use

1. Interpret Colors: The indicator line turns green when volume delta momentum is bullish (above 50) and red when bearish (below 50). Overbought and oversold zones (above 70 or below 30) may highlight exhaustion in volume-driven pushes.
2. Adjustment: Modify the RSI period in the settings to tailor responsiveness.
3. Reference Line: Use the dashed gray line at 50 as a core threshold for detecting transitions between buyer and seller dominance.

How It Differs From Standard RSI

The standard RSI uses changes in closing price to calculate market momentum. In contrast, this indicator calculates RSI using the average gains and losses of the delta volume, capturing underlying shifts in buying and selling activity—even when price is flat. This makes the Delta Volume RSI especially useful for identifying divergence between volume flow and price movement, potentially signaling strong accumulation/distribution or market reversals not visible on price-based RSI alone.