VEI compares current volume to historical average volume as a ratio or percentage. High VEI indicates unusual activity compared to normal trading patterns, signaling potential moves. Low VEI shows complacency and potential reversals.
Key Use: Identify abnormal volume activity that precedes major price moves.
VEI = Current Volume / SMA(Volume, 50)
VEI > 1.0 = Above average volume
VEI < 1.0 = Below average volume
Volume Surge Detection
VEI spikes signal abnormal activity - likely catalyst at work.
Breakout Strength
High VEI breakout = likely to persist vs low VEI breakout.
Reversal Warnings
Very low VEI on reversal patterns often signals exhaustion.
✓ Advantages
⚠ Limitations