121 Relative Volume (RVOL)

This index compares the current volume by the average volume at that given time of day during a prior number of periods. It basically, tells if the current volume is above or below average volume for that time of day.

If RVOL is 3.5, it means current volume is 3.5 times larger than the average volume.

RVOl is useful indicator for :

Trend reversal: in arrow 1 below, see how price rises while RVOL reduces, this suggests no motivation on the uptrend and a likely reversal.

Trend continuation: in arrow 2, see how after a reversal, RVol is as high as the RVol when price was declining. This suggest strong support for the up-trend.

Consolidation: in arrow 3, see how RVol remains low, this indicates indecision, no-one wants to trade, leading to price consolidation.

Figure 13.5: Relative Volume