Volume Oscillator

The Volume Oscillator (VO) identifies trends in volume using a two moving average system.

The Volume Oscillator measures the difference between a faster and slower moving average (MA).

• If the fast MA is above the slow MA the oscillator will be positive.
• If the fast MA is below the slow MA then the oscillator will be negative.
• The Volume Oscillator will be zero when the two MA's cross.

Trading Signals

• Rising volume (positive VO) signals a strong trend.
• Falling volume (negative VO) indicates trend weakness.

Example

Coca Cola Corporation with Volume Oscillator.

Price forms a flag pattern after a strong up-trend. Volume declines on each trough and rises on each peak, suggesting an upward breakout.

1. The breakout above the resistance line is then confirmed by a sharp rise in volume.

Setup

See Indicator Panel for directions. The default Volume Oscillator settings are:

• Fast MA - 5 days
• Slow MA - 10 days
• Exponential moving averages.

To alter the default settings - Edit Indicator Settings.

Subscribe to our FREE trading newsletters The weekly Trading Diary offers free multiple time frame analysis of major market indices, identifying key support and resistance levels and suitable trading strategies. More than 70,000 subscribers - Read it now The monthly Trading Updates newsletter provides new articles on Trading Strategy, Trading Psychology, Money Management, Tricks of the Trade, New Indicators and the Economy. More than 90,000 subscribers - Read it now To subscribe, check the applicable checkboxes, enter your email address in the above field and click the Subscribe button. Subscribers are protected by our Privacy Policy.