How could you have known that the signal was false? However, as you look at the chart, you will notice that Apple actually reversed at this critical level and generated a bull trap. On this breakout, Apple had a nice spike in the volume oscillator on the positive side, which should have resulted in a continuation of the breakout. We all have seen the volume bars at the bottom of the chart which shows trading activity like the chart below:
IVOLUME PRICE INCREASE HOW TO
If you are looking for how to calculate the volume oscillator and more of a technical definition of the indicator, please visit the TA-Guru.įrom a guy that believes that volume is the key to identifying the strength of a trend and where the smart money is placing their bets, the volume oscillator provides an interesting perspective for how to view market activity. In this article, I will cover 4 strategies for how to trade with the volume oscillator. If the volume oscillator is in the negative territory, volume is lacking and a change in trend is likely. To keep things super simple, whenever there is a positive reading for the volume oscillator, there is strength on the short-term in the direction of the primary trend. The volume oscillator displays the relative strength of a shorter volume moving average to a longer one. So, as I’m looking through the technical indicators I have been intrigued by the possible uses of the volume oscillator indicator.
Volume is probably one of the oldest off chart technical indicators you will find in technical analysis. Fans of the Tradingsim blog know that I am big on volume.
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