The Volume Oscillator is a technical analysis tool used to measure the difference between two moving averages of volume data. It helps in identifying trends in volume changes over different periods, which can be indicative of the strength or weakness of a price trend.

Syntax:

VolumeOscillator[S, L]

Where S represents the period for the short-term moving average and L represents the period for the long-term moving average.

Calculation:

The Volume Oscillator is calculated using the following formula:

Variation % = 100 * ((short average - long average) / long average)

This formula computes the percentage difference between the short-term and long-term volume averages.

Example:

To calculate a Volume Oscillator with a short-term period of 5 days and a long-term period of 10 days, you would use:

VolumeOscillator[5, 10]

Interpretation:

• When the short-term average volume exceeds the long-term average volume, the Volume Oscillator becomes positive, suggesting an increase in trading activity which might indicate bullish market conditions.
• Conversely, if the short-term average falls below the long-term average, the oscillator becomes negative, which might suggest bearish conditions.
• Generally, concurrent increases in both price and the Volume Oscillator can indicate a strong uptrend, while decreases might indicate a downtrend.

This indicator is particularly useful for traders who want to gauge the strength of a price trend based on volume activity.