Introduction
As I described in the previous post in our trading strategies we can attach multiple volume indicators, today I want to socialize technical aspects of the volume oscillator (VO).
The volume oscillator works as a technical tool to know the strength or weakness of a trend when it is in areas established as supports or resistances, basically the volume oscillator allows us to determine the moments where the trend will break through supports or resistances.
The volume oscillator is structured by two volume moving averages (fast and slow) that project the short and long term volume average, providing key data that allow us to determine the strength of the buying or selling pressure, for example, in scenarios where the price action breaks a certain resistance with constantly rising volume is a clear indication of buying pressure.
However, if the scenario is the opposite, i.e. the price action breaks a certain support with steadily rising volume, it is an indication of selling pressure, additionally the volume oscillator serves as a great support to traders to identify price momentum, confirm a trend, or to anticipate the probable change of trend.
SOURCES CONSULTED
➊ Steven N Using Trading Volume to Understand Investment Activity. Link
OBSERVATION:
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