Rate of Change (ROC) indicator

The Volume Oscillator is a technical analysis indicator that is used to measure the difference between two moving averages of the volume of a security. It is designed to identify changes in trading volume that may indicate a potential trend reversal.

The formula for the Volume Oscillator is as follows: Volume Oscillator = (n-period moving average of volume) - (m-period moving average of volume) / (m-period moving average of volume) x 100

In this formula, the n-period moving average of volume is typically a longer-term moving average, while the m-period moving average of volume is a shorter-term moving average.

The Volume Oscillator indicator is plotted on a chart as a line that fluctuates above and below the zero line. When the Volume Oscillator is above the zero line, it indicates that the longer-term moving average of volume is higher than the shorter-term moving average of volume, suggesting that volume is increasing. Conversely, when the Volume Oscillator is below the zero line, it indicates that the longer-term moving average of volume is lower than the shorter-term moving average of volume, suggesting that volume is decreasing.

Traders use the Volume Oscillator to identify potential trend reversals. When the Volume Oscillator crosses above the zero line, it may indicate that buying pressure is increasing and that a potential bullish trend may occur. Conversely, when the Volume Oscillator crosses below the zero line, it may indicate that selling pressure is increasing and that a potential bearish trend may occur.

Traders may also use the Volume Oscillator in conjunction with other technical analysis indicators, such as the Moving Average Convergence Divergence (MACD) or the Relative Strength Index (RSI), to confirm potential trend reversals. For example, if the Volume Oscillator and MACD both indicate a bullish trend reversal, it may provide additional confirmation that a potential buying opportunity may exist.