Price Volume Trend

Definition

The Price Volume Trend indicator is a momentum based indicator used to measure momentum or buying and selling pressure. When price adjusted volume on up days outpaces price adjusted volume on down days, then PVT rises. When price adjusted volume on down days outpaces price adjusted volume on up days, then PVT falls. What this means is that when PVT is up, buying pressure is up and when PVT is down, then selling pressure is up. The basic theory behind the Price Volume Trend indicator is that volume precedes price. This is significant because it allows the PVT to be used for a couple of different purposes. It can be used for general trend identification or confirmation. It can also be used to anticipate price movement after divergences.

Note: Divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, or is moving contrary to other data.

Price Volume Trend (PVT), much like On Balance Volume (OBV), is useful for identifying or confirming overall market trends. This can be helpful for confirming signals or setups generated by additional signals which rely on being able to identify trend in order to be effective. Also, based on the theory that swings in positive or negative price adjusted volume flow (buying and selling pressure) precede changes in price, PVT can also identify potential trend reversals.

Default Inputs

AlertLength sets the number of days to identify the bullish or bearish divergence in the indicator, 14 by default.