Indicator Overview

The Impact Volume is a structural liquidity analysis tool that dissects the "anatomical effort" of Bitcoin’s price action. Unlike traditional volume indicators that treat every trade equally, this algorithm evaluates volume based on candle structure, specifically the ratio between the solid body and the wicks.

By calculating Impact RVOL (Relative Volume), the script filters out volume that was absorbed by passive liquidity (wicks) and focuses exclusively on volume that successfully drove price discovery. It is normalised against a moving average to provide a consistent baseline for institutional participation.

How To Use

Traders can utilise the Impact Volume to separate genuine market surges from high-volume exhaustion and absorption events.

• Impact Decomposition: The indicator dynamically attributes volume to the direction of the "effort". For green candles, volume is weighted toward the body and lower wick (bullish support); for red candles, it is weighted toward the body and upper wick (bearish pressure). This helps identify clean moves where the volume perfectly supports the price structure.

• The Volume Toggle: Using the Volume: ON/OFF feature, traders can strip away the histogram to view the SMAs and EMAs cleanly. This is essential for identifying impact trends, where the moving averages of the volume itself are trending upward, suggesting a sustained increase in high-conviction buying or selling.

• Smoothing & Log-Price Context: By overlaying the Log-Scale BTC Price, you can spot volume divergences; situations where price continues to rise, but the Impact Volume SMAs are sloping downward, signalling that the move is being driven by decreasingly significant capital.