Table of Contents
Volume Zone Oscillator (VZO) combines volume data with price movement to highlight market pressure. Acts as an oscillator, typically ranging from -100 to +100.
VZO separates volume into positive and negative zones based on price direction, helping to identify overbought/oversold conditions and possible trend shifts.
Calculation Formula #
VZO is calculated as follows:
- Positive Volume (PV)
If price change is positive:PV = Volume
Else:PV = 0 - Negative Volume (NV)
If price change is negative:NV = Volume
Else:NV = 0 - Total Volume (TV)
TV = PV + NV - Adjusted Volume (AV)
AV = PV - NV - Exponential moving averages (EMA) over N periods:
EMA_AV = EMA(AV, N)EMA_TV = EMA(TV, N) - Final VZO calculation:
VZO = (EMA_AV / EMA_TV) * 100
Period (N) is user-defined. Default value: 14, adjustable based on strategy or timeframe.
Interpretation #
| VZO Value | Meaning |
|---|---|
| > +40 | Overbought zone. Possible bearish turn |
| +15 to +40 | Bullish pressure. Uptrend in progress |
| -15 to +15 | Neutral area. Potential consolidation |
| -15 to -40 | Bearish pressure. Downtrend in progress |
| < -40 | Oversold zone. Possible bullish turn |
