What does the Volume Oscillator compare?

The Volume Oscillator is designed to analyze momentum in volume by comparing two moving averages of volume. Specifically, it looks at the difference between a shorter-term moving average and a longer-term moving average of volume. When the shorter-term moving average crosses above the longer-term moving average, it indicates that volume is increasing and may suggest a bullish trend. Conversely, if the shorter-term moving average is below the longer-term one, it may suggest decreasing volume and potentially signal a bearish trend.

This comparison provides traders with insight into the strength of a price movement based on the volume accompanying it, helping them to assess whether trends may continue or reverse. Understanding how the Volume Oscillator functions allows traders to make more informed decisions regarding their trades based on volume dynamics.