This article highlights some of the most important volume-based indicators in technical analysis. It covers both short- and long-term indicators used to analyze the volume behavior of specific assets or to evaluate the broader market.

Why Does Volume Analysis Matter?

Volume analysis is important because volume often precedes price and reveals the strength behind a market move. By combining volume with price, traders gain a more complete understanding of market dynamics. When using volume indicators, it is crucial to choose the appropriate timeframes and trading parameters.

• Volume often leads price movements

• Volume can confirm strong trends, breakouts, and trend reversals

• Chart patterns typically have corresponding volume confirmation

 

Table: Volume-Based Indicators presented in this article

(A) Volume-Based Indicators for Analyzing Assets		(B) Broader Market Volume-Based Indicators
A.1 Short to Mid Term	A.2 Longer Term	B1. Short-Term	B3. Longer-Term
(1) Money Flow Index (MFI)	(10) On-Balance Volume (OBV)	(15) Advance/Decline Volume Ratio	(20) Cumulative Volume Index (CVI)
(2) Equivolume	(11) Accumulation/Distribution (A/D)	(16) ARMS (TRIN) Index	(21) Cumulative Volume Delta (CVD)
(3) Chaikin Money Flow (CMF)	(12) Intraday Intensity		(22) Visible Profile Volume Range (VPVR)
(4) Chaikin Oscillator	(13) Negative Volume Index (NVI)	B.2 Shorter to Mid Term
(5) Open Interest	(14) Positive Volume Index (PVI)	(17) Exchange Volume
(6) Demand Index		(18) Upside/Downside Volume Oscillator
(7) Volume Rate of Change (V-ROC)		(19) Up/Down Volume Oscillator
(8) Klinger Oscillator
(9) Percentage Volume Oscillator (PVO)

 

 

(A) Volume-Based Indicators for Analyzing Financial Assets

 

A.1 Short to Mid-Timeframe Volume Indicators

 

(1) Money Flow Index (MFI / Oscillator 0-100)

The Money Flow Index (MFI) combines price and volume data to measure the buying and selling pressure behind price advances and declines.

• Confirms price trends and highlights trend divergences

• Indicates overbought/oversold levels (typically 80/20), depending on the price trend

(2) Equivolume (Oscillator/Indicator)

An Equivolume chart integrates price and volume into a single plot, showing bars with varying height and width.

• Effective for identifying price breakouts and trend reversals

• Ignores open and close prices

• Less data visibility for long-term traders due to box width

(3) Chaikin Money Flow (CMF)

CMF calculates the accumulation/distribution line (ADL) divided by the corresponding volume. It reflects accumulation near highs and distribution near lows.

• Standard period: 21 days

• Confirms price trends and identifies divergences

• Generates buy/sell signals on zero-line crossovers

(4) Chaikin Oscillator

The Chaikin Oscillator applies two EMAs to the accumulation/distribution line (ADL) to create an oscillator.

• Confirms price trends and highlights divergences

• Helps anticipate trend reversals by detecting momentum changes

• Generates buy/sell signals on zero-line crossovers

(5) Open Interest

Open interest represents active positions in derivatives markets (Options and Futures), indicating the total number of unsettled contracts.

• Tracks open positions, not total traded volume

• Provides insight into contract liquidity and market interest

• Can indicate market speculation and be used as a contrarian indicator

(6) Demand Index

The Demand Index uses over 20 data columns to calculate buying and selling pressure, combining price and volume complexly.

• Confirms price trends and reveals divergences

• Generates buy/sell signals on zero-line crossovers

• Can be choppy on shorter timeframes

(7) Volume Rate of Change (V-ROC)

V-ROC measures the strength and direction of volume trends.

• Confirms breakouts by indicating shifts in volume direction

• May occasionally be misleading

(8) Klinger Oscillator

The Klinger Oscillator tracks long-term money flow trends while remaining sensitive to short-term changes.

• Compares volume flow with price movements

• Confirms trends and detects potential reversals via divergences

• Generates buy/sell signals on zero-line crossovers

(9) Percentage Volume Oscillator (PVO / short-term)

PVO calculates the percentage difference between two exponential moving averages of volume to highlight periods of strong or weak volume.

• Confirms price trends and identifies divergences

• Can be choppy and less reliable at times

Also:

• Volume-Based Moving Averages (from 5-day short-term to 60-day mid-term)

• Ease of Movement

• Force Index

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A.2 Longer Time Frame Volume Indicators

 

 

(10) On-Balance Volume (OBV)

On-Balance Volume accumulates buying and selling pressure by adding volume on up days and subtracting volume on down days. If an asset closes higher than the previous day, that day's volume is counted as up-volume.

• Provides a quick overview of the longer-term trend

• Indicates whether an asset is under accumulation or distribution

• Confirms price trends and highlights trend divergences

(11) Accumulation/Distribution (A/D)

This indicator uses volume and price to show if an asset is being accumulated or distributed.

• Calculates cumulative money flow into and out of an asset

• Confirms price trends and identifies divergences between price and volume flow

(12) Intraday Intensity

Intraday Intensity combines an asset’s volume with its price to show how intraday highs and lows align with volume relative to the previous day’s close.

• Indicates money inflows and outflows based on daily price range

• Confirms price trends and detects trend divergences

(13) Negative Volume Index (NVI)

NVI is a cumulative indicator that tracks volume changes to highlight the capital movements of smart money, based on the idea that smart money trades with less volume than retail investors.

• Highlights capital movements of smart money

• Measures activity on days when volume decreases compared to the prior day

• Confirms price trends and identifies divergences

• Less effective in markets with heavy high-frequency trading (HFT)

(14) Positive Volume Index (PVI)

In contrast to NVI, PVI focuses on positive volume changes, highlighting capital movements of the so-called “dumb money.”

• Highlights capital movements of retail investors

• Measures activity on days when volume increases compared to the prior day

• Confirms price trends and identifies divergences

• Also affected by high-frequency trading activity

Also:

• Volume-based Moving Averages (60-day or longer)

• Volume Accumulation Oscillator

• Volume Price Trend

• Yo-Yo Indicator

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(B) Broader Market Volume-Based Indicators

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B1. Shorter-Term Broader-Market Indicators

 

(15) Advance/Decline Volume Ratio

The Advance/Decline Volume Ratio calculates the ratio of the total volume of advancing stocks to the total volume of declining stocks.

• A breadth indicator

• Confirms overall market trends and highlights divergences

• Can be smoothed using a moving average for better accuracy

(16) ARMS (TRIN) Index

The ARMS or TRIN index compares the Advance/Decline Ratio (number of advancing vs. declining stocks) to the Advance/Decline Volume (volume of advancing vs. declining stocks).

• Has an inverse relationship with the market

• Can identify short-term overbought or oversold conditions

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B.2 Shorter to Mid-Term Broader-Market Indicators

 

(17) Exchange Volume (Short- to Intermediate-Term Use)

Exchange volume refers to the number of shares traded during a given day on organized exchanges such as the NYSE or Nasdaq.

• For effective analysis, exchange volume should be combined with price within a historical context

• It can assess the strength and sustainability of a market movement

• Sometimes confirms long-term market tops and bottoms

(18) Upside/Downside Volume Oscillator

This oscillator is based on a plus/minus volume ratio by combining upside and downside volume.

• Assigns a positive value to volume when the asset’s price is rising and a negative value when it is falling

• Indicates the overall volume direction

(19) Up/Down Volume Oscillator (10-Day)

This oscillator measures volume momentum based on two moving averages—a shorter-term and a longer-term.

• A positive oscillator means short-term volume strength exceeds long-term volume strength, signaling strength

• A negative oscillator indicates market weakness

• Confirms price trends and highlights divergences

• Generates buy and sell signals on zero-line crossovers

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B3. Longer-Term Broader-Market Indicators

 

(20) Cumulative Volume Index (CVI)

CVI is a momentum indicator that reveals whether net capital flows are moving into or out of the market. It considers advances and declines across the broader market.

• Confirms price trends and identifies trend divergences

• May lag at key market turning points

(21) Cumulative Volume Delta (CVD)

CVD tracks cumulative volume changes over a specific period, based on buy and sell aggressors.

• When volume delta is above zero, CVD displays a green bar indicating buying pressure exceeds selling pressure

• When volume delta is below zero, CVD shows a red bar indicating selling pressure exceeds buying pressure

• A flat CVD suggests the market is likely in an accumulation, re-accumulation, or distribution phase

• More: https://tradingcenter.org/index.php/learn/technical-analysis/350-cvd-volume-based-indicator

(22) Visible Profile Volume Range (VPVR)

VPVR creates a histogram on the chart that displays total volume traded at each price level, helping traders identify price levels of significant historical importance.

• Particularly useful on higher timeframes

• Excellent for identifying long-term support and resistance levels

 

■ Volume-Based Indicators

G. Protonotarios for ExpertSignal.com (c)

8th of November 2024

 

Sources:

• “Trader’s Book of Volume” by Mark Leibovit
• TradingCenter.org