What does the Volume Weighted MACD use to perform its calculations?

The Volume Weighted MACD (Moving Average Convergence Divergence) utilizes the concept of volume combined with closing prices to provide a more nuanced indicator of price movement, taking into account the amount of trading activity. Specifically, it calculates the MACD by weighting the closing prices according to the volume traded during that period. This means that if a stock had high trading volume on a particular day, the MACD calculation would reflect that higher level of activity more significantly than days with lower volume. By incorporating volume into the MACD, traders can get a clearer picture of the strength of trends, as significant price movements accompanied by high volume are generally more reliable indicators of market momentum. This approach helps traders identify potential buy and sell signals by better aligning price changes with trading receipts.

The other choices do not reflect the correct methodology of Volume Weighted MACD. Multiplying closing prices by the trading range or daily price changes adjusted for volatility lacks the direct inclusion of volume in a manner relevant to the MACD's purpose. Average trading volumes of stocks do not provide the specific volume-weighted element that is crucial for this indicator's calculations.