Price Volume Trend(PVT): How to analyze the financial market using price volume trend

By QuintoTrader | Quinto Trader | 18 Oct 2019


Price volume Trend is a volume based indicator.

Being a volume indicator, price volume trend indicator is used to measure momentum as well as to help traders know whether the market is trending upwards or in a downwards market direction.Just like other volume indicators, price volume trend is also based on divergence. As a volume indicator, Price volume trend indicator is considered to be the same as on balance volume. Despite the Price volume trend(PVT) and on balance volume(OBV) considered to be the same,they differ on the fact that in  on balance volume you only add or subtract the total daily volume while in price volume trend(PVT), it only adds a portion of the volume multiplied by the percentage change of the close price divide by the previous close price as follows;

Price volume trend(PVT)= [{(Current close - previous close)/previous close}*100]+ previous Price volume trend(PVT)

Price volume indicator can further be explained as follows;

Since price volume trend is based on divergence,it therefore follows that when the price is uptrending while the price volume trend is moving downwards,the price will reverse and start moving in the same direction downwards as the price volume trend.On the other hand,when the price is downtrending while the price volume trend is moving upwards,the price will reverse and start moving in the same direction upwards as the price volume trend.This is indicated as from the candle sticks chart below;

 

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From the candle sticks chart above,there are 3 points,A,B and C.Point A and B are divergence point while point C is the price volume trend curve.At point A,the price in the market was moving upwards while the price volume trend(PVT) was moving downwards.This results to reversal in the price thus it started moving in the same direction downwards as the price volume trend(PVT) thus signaling the trader to be trading downwards.On the other hand,at point B,the price in the market was moving downwards while the price volume trend was uptrending.This results in reversal in the price thus it started moving in the same direction upwards as the price volume trend(PVT) thus signaling the trader to be trading in the upward market.

 


Recommendation:If you are a day trader just use 1 min,5 min,15 min and 30 min timeframe while if you are a swing trader just use 1 hour and above timeframe if you want price volume trend indicator to work well for you.

 

 

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QuintoTrader
QuintoTrader

Trader, Blockchain Technologist and Contentpreneur. Also founder and CEO @ Quinto Trader


Quinto Trader
Quinto Trader

Teacher forex school provides individual with training regarding to forex trading and cryptocurrency trading. We also share trading ideas online for both crypto and forex market

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