122 Volume oscillator (VO)

Two moving averages (slow and fast) are applied to volume, and the difference between the two EMAs becomes the volume oscillator. The logic here is that quick changes in volume would become evident from slow volume trend.

These spikes in short term volume can indicate trend continuation (Orange arrows below) or trend reversal (Black arrows). These alternative patterns can be differentiated by using the color of the candle or momentum indicators.

The longer the

Figure 13.6: Volume oscillators