VPCI or known as Volume Price Confirmation Indicator was developed by Buff Dormeier. It plots the relationship between the price trend and the volume.
You may find this excerpt interesting (full article):
Fundamentally, the VPCI reveals the proportional imbalances between price trends and volume-adjusted price
trends. An uptrend with increasing volume is a market characterized by greed supported by the fuel needed to
grow. An uptrend without volume is complacent and reveals greed deprived of the fuel needed to sustain itself.
Investors without the influx of other investors ( volume ) will eventually lose interest and the uptrend should
A falling price trend reveals a market driven by fear. A falling price trend without volume reveals apathy, fear
without increasing energy. Unlike greed, fear is self-sustaining, and may endure for long time periods without
increasing fuel or energy. Adding energy to fear can be likened to adding fuel to a fire and is generally bearish
until the VPCI reverses. In such cases, weak-minded investor's, overcome by fear, are becoming irrationally
fearful until the selling climax reaches a state of maximum homogeneity. At this point, ownership held by weak
investor’s has been purged, producing a type of heat death capitulation. These occurrences may be visualized by the VPCI falling below the lower standard deviation of a Bollinger Band of the VPCI, and then rising above the
lower band, and forming a 'V' bottom.
#// @author LazyBear
#// If you use this code in its orignal/modified form, do drop me a note.
#study("Volume Price Confirmation Indicator [LazyBear]", shorttitle="VPCI_LB" )
# Converted to TOS by Rigel 2018.
input shortTerm = 5;
input longTerm = 20;
input src = close;
input BBlength = 20; #, title="BB Length"
input mult = 2.5;
def vpc = vwap(period=longTerm*agg) - Average(src, longTerm);
def vpr = vwap(period=shortTerm*agg) / Average(src, shortTerm);
def vm = Average(volume, shortTerm) / Average(volume, longTerm);
plot vpci = vpc * vpr * vm;
input lengthMA=8 ; #, "VPCI MA Length"
plot MA = Average(vpci, lengthMA);
def bb_s = vpci;
plot basis = Average(bb_s, BBlength);
def dev = (mult * StDev(bb_s, BBlength));
plot upper = (basis + dev);
plot lower = (basis - dev);
This indicator was converted to ThinkorSwim by rigel from the TradingView version developed by LazyBear.