Positive Volume Index (PVI) Indicator
The Positive Volume Index (PVI) is a technical indicator that measures the cumulative volume of trades on days when the volume is higher than the previous day’s volume. It is designed to help traders assess the strength of a trend based on volume changes, particularly when the market is bullish.
Overview of Positive Volume Index Indicator
The PVI operates on the principle that volume often precedes price movement. By focusing on days with increased trading volume, the PVI provides insights into the buying pressure in the market. This makes it particularly useful for identifying trends and potential reversals.
Key Features of Positive Volume Index Indicator
- Cumulative Volume Measurement: The PVI accumulates volume only on days where the volume is greater than the previous day’s volume. This approach emphasizes the importance of volume in confirming price movements.
- Trend Confirmation: A rising PVI indicates that the buying interest is increasing, which confirms a bullish trend. Conversely, a declining PVI suggests a weakening trend, indicating reduced buying pressure.
- Divergence Signals: Traders can use divergence between the PVI and price movements to identify potential reversals. For example, if the price is rising but the PVI is not, it may suggest that the bullish momentum is fading.
How to Use Positive Volume Index Indicator
- Open the platform:
- Log in to your account.
- Load the chart for the asset you wish to analyze.
- Select the Timeframe:
- Choose an appropriate timeframe for your analysis, such as daily, weekly, or intraday charts, depending on your trading strategy.
- Add the Positive Volume Index Indicator:
- Navigate to the Indicators section in the platform interface.
- Search for Positive Volume Index.
- Click to add the indicator to your chart, which will typically appear as a line graph below the price chart.
- Interpret the Indicator:
- The PVI line will rise or fall based on the volume of the asset on days with higher trading volume compared to the previous day.
- A rising PVI suggests increased b