How to Build a Volume Indicator in Pine Script v6: Buying & Selling Pressure Analysis
Volume is one of the most fundamental data points in technical analysis — it tells you how much was traded, not just at what price . In this post, you will learn how to build a complete volume indicator in Pine Script v6 that color-codes bars by buying or selling pressure, detects volume spikes using a dynamic SMA baseline, and annotates those spikes directly on the chart using plotshape() with location.absolute . 1. What Is Volume and Why Does It Matter? Volume represents the total number of contracts or shares exchanged during a given bar. When price moves on high volume , the move is considered more significant. When price moves on low volume , it may lack conviction. The key analytical concepts are: Buying Pressure: Close price is above the open price — bulls dominated the bar. Selling Pressure: Close price is below the open price — bears dominated the bar. Volume Spike: Current volume exceeds a rolling average by a con...