Percentage Volume Oscillator (PVO)

Name Type Prerequisite Use Cases
Volume Oscillator (VO) Volume EMA Identifying when volume is expanding or contracting.

Definition

The Percentage Volume Oscillator (PVO) is a momentum oscillator for volume. It measures the percentage difference between two moving averages of volume. It is similar to MACD, but for volume instead of price.

Mathematical Equation

\[ PVO = \frac{EMA_{12}(Volume) - EMA_{26}(Volume)}{EMA_{26}(Volume)} \times 100 \]

A signal line (9-period EMA of PVO) is often plotted to generate signals.

Special cases

  • Maximum possible value: Unbounded
  • Minimum possible value: Unbounded
  • Behavior: Oscillates around zero, comparing two moving averages of trading volume.

Visualization

Percentage Volume Oscillator

Trading Significance

  1. Trend Confirmation: Rising PVO indicates volume is increasing, which can confirm a price trend. Falling PVO indicates decreasing volume.

  2. Breakout Validation: A higher PVO on a breakout confirms the strength of the move.

  3. Divergence: Divergence between PVO and price can signal a potential reversal.