Price and Volume Trend
Price and Volume Trend (PVT) is a variation of On Balance Volume, used to determine the strength of trends and warn of reversals.
Price and Volume Trend should not be used on its own but in conjunction with other indicators.
During a ranging market watch for a rising or falling Price and Volume Trend.
- Rising PVT signals an upward breakout.
- Falling PVT signals a downward breakout.
A rising Price and Volume Trend confirms an up-trend and a falling PVT confirms a down-trend.
- Bullish divergence between PVT and price warns of market bottoms.
- Bearish divergence between PVT and price warns of market tops.
Australia and New Zealand Banking Group Limited (ANZ) is shown with Price Volume Trend.
Mouse over chart captions to display trading signals.
- After a strong up-trend there is a bearish divergence with price making a new high and Price and Volume Trend making a lower high.
- This is followed by a triple divergence: price makes a higher peak while PVT is lower.
- Price makes another new high at the end of February while PVT again fails to make a new high. Note the classic divergence.
The steps in the Price and Volume Trend calculation are:
- Calculate the Percentage Change in closing price:
( Closing Price [today] - Closing Price [yesterday] ) / Closing Price [yesterday]
- Multiply the Percentage Change by Volume:
Percentage Change * Volume [today]
- Add to yesterday's cumulative total:
Percentage Change * Volume [today] + PVT [yesterday]