Volume Oscillator ( VOSC )
The Volume Oscillator displays the difference between two moving averages of a security's volume . The difference between the moving averages can be expressed in either points or percentages.
The difference between two moving averages of volume can be used to determine if the overall volume trend is increasing or decreasing. When the Volume Oscillator rises above zero, it signifies that the shorter-term volume moving average has risen above the longer-term volume moving average, and thus, that the short-term volume trend is higher (i.e., more volume) than the longer-term volume trend.
There are many ways to interpret changes in volume trends. One common belief is that rising prices coupled with increased volume, and falling prices coupled with decreased volume, is bullish. Conversely, if volume increases when prices fall, and volume decreases when prices rise, the market is showing signs of underlying weakness.
The theory behind this is straight forward. Rising prices coupled with increased volume signifies increased upside participation (more buyers) that should lead to a continued move. Conversely, falling prices coupled with increased volume (more sellers) signifies decreased upside participation.
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.