The Spectrum Bars study transforms regular color scheme of the volume plot based on correlation of Close price and volume values with those from several bars ago.
A volume bar is colored green if both volume and Close price are greater than those from a specified number of bars ago. If this condition is true for Close price but false for volume, the volume bar is colored blue. In case it is true for volume and false for Close price, the volume bar is colored red. Orange color is used when this condition is false for both volume and Close price.
Note that you can also apply this algorithm to color the price plot and change the color scheme using input and plot parameters.
||The number of bars to go back to find the past price and volume.|
||Defines whether or not to paint the price plot according to the algorithm.|
||The Spectrum Bars plot.|
*For illustrative purposes only. Not a recommendation of a specific security or investment strategy.
1. "A Color-Based System for Short Term Trading" by Edgar Kraut. Technical Analysis of Stocks & Commodities, July 2011.