Volume Oscillator

Type

Volume indicator

Statement

The "Volume Oscillator" ("VO") indicator helps to identify breakthroughs of support and resistance. By forming the difference, the indicator fluctuates freely upwards and downwards around the zero line. A signal is generated by crossing the zero line.

Formula/calculation

The Volume Oscillator consists of two MAs on a volume basis, a shorter and a longer MA. The calculation generally subtracts the longer, "slower" MA from the shorter, "faster" MA.

Volume Oscillator = [(short MA(V) - long MA(V)) / long MA(V)] * 100

Interpretation

Because the indicator is generally formed on the basis of two MAs, we also limit our interpretation to this case.

A value above the zero line indicates that the shorter MA is above the longer one and thus the turnover volume is increasing. Conversely, a value below the zero line indicates that the shorter MA is below the longer one and thus the volume of sales is decreasing. The indicator does not provide a direct signal, but it is interesting to see whether the rising turnover is also accompanied by falling or rising prices.

If this is the case, then the trend prevailing in the underlying is definitely in order. If divergences arise, a trend reversal is to be expected.

Default setting

Example: Volume Oscillator