GCM Price Based Color

Indicator Name:

GCM Price Based Color Indicator

Detailed Description:

The GCM Price Based Color Indicator is a unique tool designed to help traders spot potential "pump" events in the market. Unlike traditional Volume Rate of Change (VROC) indicators, this script is conditional: it calculates a VROC value only when both the average volume and the price are increasing. This focus helps filter out volume surges that don't accompany immediate price appreciation, highlighting more relevant "pump" signals.

Key Features & Calculation Logic:

Conditional Volume Rate of Change (VROC):

It first calculates a Simple Moving Average (SMA) of the volume over a user-defined length (lookback period).

It then checks two conditions:

Is the current SMA volume greater than the previous bar's SMA volume (i.e., volumeIncreasing)?

Is the current close price greater than the previous bar's close price (i.e., valueIncreasing)?

Only if both volume Increasing AND value Increasing are true, a VROC value is calculated as (current _ MA _ volume - previous _ MA _ volume) * (100 / previous _ MA _ volume). Otherwise, the VROC for that bar is 0.

Historical Normalization:

The raw VROC value is then normalized against its own historical maximum value observed since the indicator was applied. This scaling brings all VROC values into a common 0-100 range.

Why is this important? Normalization makes the indicator's readings comparable across different assets (e.g., high-volume vs. low-volume stocks/cryptos) and different timeframes, making it easier to interpret the strength of a "pump" relative to its own past.

Dynamic Plot Color (Price-Based):

The plot line's color itself provides an immediate visual cue about the current bar's price action:

Green: close is greater than close[1] (price is up for the current bar).

Red: close is less than close[1] (price is down for the current bar).

Grey: close is equal to close[1] (price is flat for the current bar).

Important Note: The plot color reflects the price movement of the current bar, not the magnitude of the VROC Normalized value itself. This means you can have a high vrocNormalized value (indicating a strong conditional volume surge) but a red plot color if the very next bar's price closes lower, providing a multi-faceted view.

Thresholds & Alerts:

Two horizontal lines (small Pump Threshold and big Pump Threshold) are plotted to visually mark significant levels of normalized pump strength.

Customizable alerts can be set up to notify you when VROC Normalized reaches or exceeds these thresholds, helping you catch potential pump events in real-time.

How to Use It:

Identify Potential Pumps: Look for upward spikes in the VROC Normalized line. Higher spikes indicate stronger pump signals (i.e., a larger increase in average volume coinciding with an increasing price).

Monitor Thresholds: Pay attention when the VROC Normalized line crosses above your small Pump Threshold or big Pump Threshold. These are configurable levels to suit different assets and trading styles.

Observe Plot Color: The line color provides crucial context. A high VROC Normalized (strong pump signal) with a green line indicates current price momentum is still positive. If VROC Normalized is high but the line turns red, it might suggest the initial pump is losing steam or experiencing a pullback.

Combine with Other Tools: This indicator is best used in conjunction with other technical analysis tools (e.g., support/resistance, trend lines, other momentum indicators) for confirmation and a more holistic trading strategy.

Indicator Inputs:

Lookback period (1 - 4999) (default: 420): This length determines the period for the Simple Moving Average (SMA) of volume. A higher value will smooth the volume average more, reacting slower, while a lower value will make it more reactive. Adjust based on the timeframe and asset volatility.

Big Pump Threshold (0.01 - 99.99) (default: 10.0): The normalized VROC Normalized level that signifies a "Big Pump." When VROC Normalized reaches or exceeds this level, an alert can be triggered.

Small Pump Threshold (0.01 - 99.99) (default: 0.5): The normalized VROC Normalized level that signifies a "Small Pump." This is a lower threshold for earlier or less significant pump activity.

Alerts:

Small Pump: Triggers when VROC Normalized crosses above or equals the small Pump Threshold.

Big Pump: Triggers when VROC Normalized crosses above or equals the big Pump Threshold.

Best Practices & Considerations:

Timeframes: The indicator can be used on various timeframes, but its effectiveness may vary. Experiment to find what works best for your chosen asset and trading style.

Volatility: Highly volatile assets might require different threshold settings compared to less volatile ones.

Lag: Due to the use of a Simple Moving Average (SMA) for volume, there will be some inherent lag in the calculation.

Normalization Start: The historic Max for normalization starts with a default value of 10.0. For the very first bars, or if there hasn't been a significant VROC yet, the VROC Normalized might behave differently until a true historical maximum VROC establishes itself.

Not Financial Advice: This indicator is a tool for analysis and does not constitute financial advice. Always perform your own research and manage your risk.