The Percentage Volume Oscillator (PVO) is the percentage difference between two moving averages of volume.
The PVO oscillates around zero.
The following formula is used:
PVO = ((Volume_EMA_Fast – Volume_EMA_Slow) / Volume_EMA_Fast) x 100
Usage
The direction of the PVO moves as well as the centerline crossovers can be used to visually determine if the volume is above / below average, and in which direction it is changing.
The EMA of PVO. As with many indicators, the EMA of indicator is sometimes used together with the indicator itself, to determine the direction and some additional details (or to make them easier to estimate visually). The difference between the PVO and its EMA is represented by a histogram.
The usual set of parameters for the PVO analysis is (12 (EMA1), 26 (EMA2), 9(EMA of PVO))
The PVO itself does not provide buy / sell signals, but is very useful as a confirmation tool. The large scale change in the price move is usually accompanied by the change in a PVO value. As usual, the trendlines can be drawn on the PVO chart, to determine the general direction of the change.
The volume oscillator allows a mathematical evaluation of volume surges. Using this tool, you can gauge the impact a volume surge might have on the market. Large positive oscillator values are indicative of significant volume surges. If such volume surges occur while an index is trending higher, they are by our definition buying or bullish volume surges. Conversely, if such volume surges appear during a bearish market,