Absolute Volume Oscillator (AVO)

Total volume momentum regardless of price direction

Overview

Absolute Volume Oscillator measures the momentum of total volume regardless of whether price moved up or down. It shows when overall market activity is accelerating or decelerating, independent of direction.

Key Use: Identify periods of increasing participation about to trigger breakouts.

Formula

AVO = EMA(Volume, 12) - EMA(Volume, 26)

Similar to MACD but applied to volume only

Above Zero

Short EMA > Long EMA - volume accelerating

Below Zero

Short EMA < Long EMA - volume decelerating

Use Cases

Participation Increase

Positive AVO crossover shows more traders entering market.

Breakout Validation

AVO spike confirms increasing participation on move.

Market Interest

Declining AVO signals fading interest and potential reversal.

Characteristics

✓ Advantages

  • • Pure volume momentum
  • • Direction-independent measurement
  • • Clear divergences possible

⚠ Limitations

  • • Doesn't show direction
  • • Can be noisy in choppy markets
  • • Needs trend context

Related Indicators

Volume OscillatorVROCForce IndexOBV