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What Is The Best Way To See If the Average Near Term Volume Is Increasing Or Decreasing?

What is the best way to see if the average near term volume is increasing or decreasing on a chart? I find it difficult to visually determine if there is a pattern of Accumulation or Distribution, by looking at the Volume Bars.

Best Answer

  • markdmarkd mod
    Accepted Answer
    You could use an MA of Volume - or maybe two - say a 20 and a 5; when they are rising, volume is increasing over the term of the average; if the five is above the 20, the shorter term raw volume is increasing faster.

    But raw volume alone does not necessarily indicate accumulation or distribution is happening. You could use on balance volume or accumulation/distribution indicators for that, or, if you want to customize the period of interest, Chaiken Money Flow or Force Index with the default parameters, or your own. Browse through chart school to find others, like Money Flow Index, that are a little more complicated. For CMF or Force, you could add a MA as a kind of signal line - when the indicator moves above, accumulation is starting to have an impact, when below, distribution.

Answers

  • In addition to markd's comments... I was thinking of PVO. I believe (but not certain) that it is the MACD of volume. It does not tell you if it is advancing volume or declining volume. Also, it does not tell you if it is Accumulation/Distribution. You can use it to confirm other signals. Also, it lags. I might need a refresh on PVO.
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