Injected Volume Footprint (IVF)

4 nov.

Reading volume footprints to interpret buying and selling pressure involves examining the intensity and timing of buy/sell activity within each candle. Although this IVF indicator does not directly show the sequence of buying and selling events within a single candle (as a true footprint chart would), here’s how you can interpret the volume data presented by IVF to get insights on market pressure:

Step 1: Identifying Strong Pressure

*Check Color Intensity:

• Darker shades represent higher intensity for both buy and sell volumes.
  
• Look for dark green shades for strong buying pressure and dark red or orange shades for strong selling pressure. This helps you quickly spot candles with a high level of activity on one or both sides.
  

*Check Volume Stacking:

*Since buy volumes are above the zero line and sell volumes are below, large differences between the two suggest dominance by one side.
*If buy volume is significantly higher (e.g., tall green bar with a small red/yellow bar underneath), buying pressure is dominant. Conversely, if sell volume is larger (tall red/yellow bar with a small green bar above), selling pressure dominates.

Step 2: Interpreting Both Buy and Sell Activity

*Simultaneous Pressure:
*If you see strong green (buy) and red/yellow (sell) volumes within the same candle, it indicates that there was active trading on both sides during that period.
*This scenario might suggest a battle between buyers and sellers—often seen near critical support or resistance levels where both sides are actively defending their positions.

Balance vs. Imbalance:
*Balanced Pressure: When buy and sell volumes are similar in size, it indicates a period of indecision or a potential consolidation. This usually happens when neither buyers nor sellers have a clear upper hand.
*Imbalanced Pressure: If one side has a much larger volume than the other, it shows a clear dominance. For instance, if green buy volume dominates, it means buyers were willing to absorb sell orders aggressively, suggesting a possible uptrend.

Step 3: Estimating Sequence (Hypothetical)

Although IVF doesn’t provide a direct sequence, you can make educated guesses based on context:

Price Action Context:
*If the candle opens and initially moves down but then closes higher (bullish candle), it might indicate that selling pressure came first and buying pressure followed, pushing the price up.
*Conversely, if the candle opens and moves up first but closes lower (bearish candle), buying might have started first but was overtaken by selling pressure.

Volume Reaction to Price Levels:
*At support levels, if you see strong buy volumes with some sell volumes, it might mean initial selling pressure was absorbed by buyers defending the level.
*At resistance levels, if sell volume increases with some buy activity, it may indicate initial buying was met by aggressive selling, potentially reversing the price.

Trend Context:
*In an uptrend, strong sell volume within an otherwise bullish candle may indicate profit-taking or the start of a pullback, as sellers try to cap further gains.
*In a downtrend, strong buy volume in a bearish candle may indicate potential accumulation or buyers attempting to slow the decline, signaling a possible reversal if the trend weakens.


Conclusion
The IVF indicator doesn’t provide the exact sequence of events within each candle like true footprint data would, but by analyzing the intensity, balance, and context within the price action, you can get a reasonable sense of which side was more aggressive and how both buying and selling pressures interacted.