Volume Strength Indicator: Combining Price RSI with Volume Signals

Summary

The Volume Strength Indicator (VSI) pairs a price-based relative strength index with an RSI calculated from a selectable volume measure: On-Balance Volume, Accumulation/Distribution, Elder’s Force Index, or Price Volume Trend. Both RSI series are smoothed, while a separate histogram scales current volume against an average and colors it according to volume intensity and price direction. The described default RSI period is 13, with configurable source, smoothing, and histogram settings.

The guide proposes reading levels above 75 and below 25 as possible overbought and oversold conditions, using 50 as a neutral reference, and watching for disagreement between price and volume RSI as a possible divergence. These are interpretive signals, not tested trading rules: the document supplies indicator construction and code but no performance study or statistical validation. Thresholds and signals may behave differently across instruments and market regimes. It suggests combining VSI with trend indicators and adapting its settings, while leaving risk controls and entry or exit rules to the trader.

Key ideas

• VSI compares a price RSI with an RSI computed from one of four selectable volume-derived series.
• The indicator smooths both RSI series and displays volume relative to its average in a direction-colored histogram.
• The guide treats readings above 75 and below 25 as possible overbought and oversold conditions, with 50 as a neutral level.
• Divergence between price RSI and volume RSI may suggest a change in buying or selling pressure.
• The document provides indicator code but no performance validation, so its signals require independent testing.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.