Volume Flow Oscillator Signals from OBV and Price Divergence
Summary
The Volume Flow Oscillator (VFO) is presented as an indicator derived from On Balance Volume and described in a 2004 issue of Technical Analysis of Stocks & Commodities. It uses volume-related calculations to produce a reading around a zero line. Positive values are interpreted as accumulation and bullish conditions, while negative values are interpreted as distribution.
The document also suggests watching for divergence between price and the oscillator as a possible sign of a coming trend change. It lists four settings: calculation period, deviation coefficient, the impact factor assigned to the previous day’s volume, and smoothing period. No formula, chart examples, validation results, or rules for acting on signals are included, so the interpretations are guidance rather than demonstrated predictive evidence.
Key ideas
- The VFO is based on the On Balance Volume indicator.
- Readings above zero are interpreted as bullish accumulation, while readings below zero suggest distribution.
- Price and oscillator divergence may signal a potential trend change.
- The settings control the calculation period, deviation, prior-day volume impact, and smoothing.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.