The HawkEye Volume is a specialized volume indicator used in Forex trading that provides insights into market sentiment and potential price movements based on volume data.

Nigel Hawkes created this indicator, which traders now use to analyze price movements based on volume changes.

This article will explain the HawkEye volume indicator and how it is used in currency trading.

Understanding the HawkEye Volume Indicator

HawkEye Volume is designed to highlight areas of accumulation, distribution, and potential hidden strength or weakness in a market. It provides insights into the overall sentiment of market participants, helping traders gauge potential future price movements

Key Features of HawkEye Volume:

• Color-Coded Bars: Volume bars are colored based on specific conditions, indicating bullish or bearish sentiment.
• Volume Spikes: Identifies significant increases or decreases in volume, which can signal potential market turning points.
• Hidden Strength or Weakness: Reveals hidden buying or selling pressure that may not be immediately apparent from the price action alone.

The volume bars are colored based on the calculated value, with green bars indicating bullish sentiment and red bars indicating bearish sentiment.

The indicator identifies unusually large volume bars, which can signal significant buying or selling pressure.

HawkEye Volume can also reveal hidden accumulation or distribution, where large volumes are traded at relatively stable prices.

By analyzing the color-coded volume bars and identifying volume spikes, traders can gauge the overall market sentiment and potential future price movements.

How does it work?

First, you set rules for how far back in time the indicator should look, called ‘Length,’ and how sensitive it should be to changes, called ‘Divisor.’

Then, it calculates average prices and volume over a period set by ‘Length.’ This is like the normal temperature of the market.

Next, it finds the middle point of yesterday’s high and low prices and sets upper and lower limits around it based on ‘Divisor.’ This creates a comfort zone around the middle point.

After these ground rules are all set, the indicator goes ahead to use this to detect when to colour the volumes bars red or green.

First, it checks for bearish signs. If it finds these signs, it prepares to color the volume bar red. Next, it looks for bullish signs. When found, it prepares to color the volume bar green.

Lastly, it checks for neutral signs and it prepares to color the volume bar gray.

How to Use HawkEye Volume in Currency Trading

1. Apply the Indicator: Firstly, add the HawkEye Volume indicator to your trading chart. It is downloadable on TradingView and MetaTrader 4 (MT4).
2. Interpret Color-Coded Bars: Green bars generally indicate bullish sentiment, while red bars suggest bearish sentiment.
3. Identify Volume Spikes: Look for unusually large volume bars that may signal significant buying or selling pressure.
4. Analyze Hidden Strength or Weakness: Observe the relationship between price action and volume to identify hidden accumulation or distribution.
5. Combine with Other Indicators: Use HawkEye Volume in conjunction with other technical indicators for a more comprehensive analysis. You can also use other volume indicators too.

Conclusion

Using the HawkEye Volume indicator in Forex trading comes with some good benefits.

It provides deeper insights into market dynamics beyond price action alone. It also helps identify potential buying and selling opportunities based on volume-related signals.

Additionally, it could be used as a risk management tool. HawkEye Volume can help you understand market sentiment and adjust your risk accordingly.

While HawkEye Volume can be a valuable tool, it’s essential to use it in combination with other technical analysis methods and consider the broader market context for accurate trading decisions.