What Is CVD?
Cumulative Volume Delta (CVD) is the running sum of delta across all candles in the visible range. Starting from a reset point (session open, day start, or the beginning of the chart), each candle’s delta (buy volume minus sell volume) is added to the running total.- Rising CVD: Buyers have been more aggressive than sellers over the accumulation period.
- Falling CVD: Sellers have been more aggressive than buyers over the accumulation period.
How CVD Divergence Works
The indicator identifies swing highs and swing lows in both price and CVD using a fractal-based method. It then compares the two series:Bearish CVD Divergence
Price makes a higher high, but CVD makes a lower high (or fails to make a new high). This means:- Price reached a new extreme, but the cumulative buying pressure behind it was weaker than the previous swing.
- The rally is losing order flow support.
- Sellers may be gaining control beneath the surface.
Bullish CVD Divergence
Price makes a lower low, but CVD makes a higher low (or fails to make a new low). This means:- Price reached a new low, but cumulative selling pressure was weaker than the previous swing.
- The decline is losing order flow support.
- Buyers may be absorbing the selling pressure.
Settings
Detection Parameters
The
fractalSize parameter has a significant impact on signal behavior. A fractal size of 3 detects smaller, more frequent swings and produces more divergence signals. A fractal size of 5 requires stronger, more established swing points and produces fewer but more reliable signals. For swing trading, use 5. For intraday scalping, 3 or 4 may be more appropriate.Visual Settings
Display Modes
CVD Divergence operates as both an overlay and a subchart:- Overlay: Divergence dots and connecting lines appear directly on the price chart at the swing points where the divergence was detected.
- Subchart: The CVD line itself is plotted in a separate panel below the price chart, allowing you to visually compare the CVD trend with price action.
Reset Period
The reset period determines when the CVD running total resets to zero. This is an important parameter because CVD is a cumulative measure, and without resets, data from days or weeks ago can dominate the current reading.Alert Rules
Because CVD divergence requires fractal confirmation (waiting for N bars after the swing point), alerts fire with a delay equal to the fractal size. This delay is inherent to the signal and ensures the swing point is genuine.
CVD Divergence vs. Delta Divergence
These two indicators are complementary, not redundant:
When both indicators align — a CVD divergence at a swing high combined with a delta divergence on the candle at that high — the confluence creates a high-probability reversal setup.
Practical Usage
Best Timeframes
Confluence Setups
- Support/Resistance levels: CVD divergence at a major support or resistance level adds order flow confirmation to a structural price level.
- Volume Profile extremes: Divergence at a low-volume node (LVN) suggests the market is rejecting an attempt to push through thin liquidity.
- Absorption Alpha: When absorption markers appear at the same swing point where CVD divergence is detected, the signal is reinforced from both micro and macro perspectives.
Common Pitfalls
- Wrong reset period: Using
noneon a 1-minute chart accumulates days of data, making the CVD line dominated by old history. Always match the reset period to your trading horizon. - Fractal too small: A fractal size of 3 on a 1-minute chart fires frequently and many signals will be noise. Increase fractal size on lower timeframes.
- Ignoring the trend: CVD divergence in the middle of a strong trend may be premature. The most reliable signals occur at established price extremes where the trend is extended.