Volume Price Trend

Type

Volume indicator

Statement

The "Volume Price Trend" ("VPT") indicator helps to better assess price trends and the quality of price changes. The VPT consists of a "cumulative" turnover line to which values are added (price increase) or subtracted (price decrease) for the current turnover and price changes.

The VPT is related to the "On Balance Volume" indicator, but in addition to the direction of the development, it also takes into account the strength of this development.

Formula/calculation

VPT = Previous VPT + ((Volume * (Today's Close - Last Close)/Last Close))

Interpretation

The interpretation is primarily done via trend changes in the indicator, sometimes also via the calculation of a MA on the VPT.

When the indicator is in the positive zone but turns downwards, it shows that the upward momentum is weakening, making it likely that the price will fall. Conversely, when the indicator is in the negative zone and turns upwards, this indicates a weakening downtrend, and thus a rising price is to be expected soon.

Example: Volume Price Trend