This binary options’ indicator considers the price change and the volume change in the percentage terms. At the same time, it can show that the current market trend has the particular strength and that the market movement has no strength. This indicator differs from the majority of similar indicators by the fact that is shows the growth or the decline of prices in the percentage terms.
Description of Price and Volume trend binary options’ indicator
As we have already mentioned above, this indicator shows the growth or the decline in percentage terms specifically and not by adding or subtracting of volumes. In general, this indicator is similar to the OBV, but it is considered to be clearer. At the same time, this indicator’s showings can be considered as the showings of the customary oscillator, and it is very convenient in a work.
Subsequently, if the line of the Price and Volume trend binary options’ indicator grows, it means that there is the ascending trend in the market. In principle, it is common for the majority of oscillators and trend indicators. On the other hand, if the indicator’s line declines, it means that there is the descending trend in the market currently. Again, such action of the indicator is more peculiar for the indicator oscillators or the trend tools. And, if we consider the volume indicator, we can say that it can grow on both ascending and descending trends.
This indicator has its own overbought and oversold zones, as well as the indicators which are called oscillators. In this case, it can be referred to the change of the current trend. If a line is in the overbought zone, the descending trend can appear in the market. And, if a price falls within the oversold zone, then the descending trend appears in the market.
Signals of Price and Volume Trend binary options’ indicator
- The growing PVT confirms the ascending trend in the market. The declining PVT is the characteristic of the descending trend in the market.
- If the PVT positive value is high, then there is the oversold situation in the market.
- When the PVT negative value is high, then the market is oversold.
- If the growth of prices is accompanied by the decrease or the neutral value of the PVT, it means that a divergence exists and shows that the price movement up is weak and lacks certainty.
- If the price lowering is accompanied by the increase or the neutral value of the PVT, this is the characteristic of a divergence and it shows that the price movement down is weak and a trend lacks certainty.
Interpretation of indicator signals:
The Price and Volume trend is a valuable technical tool for an analysis, which combines both price and volume for the confirmation of the price movement. It warns of the potential weakness or the absence of a certainty that buyers and sellers can have.
The other analogous indicators are the Chaikin’s oscillator and the Money Flow Index.
Benefits and disadvantages of Price and Volume trend:
The PVT is analogous to the OBV, but it is considered clearer because it sums up the small part of a volume with the slight price change, but increases this part of volume if a price has grown significantly.
The PVT sends many false signals, for this reason, it should not be used separately.