Technical Analysis - (Stock Symbol: )
Volume Accumulation Oscillator (VAO Historical Quotes)
About Volume Accumulation Oscillator
In technical analysis Volume Accumulation Oscillator (VAO) is used to track money flow. This is one of the various Money Flow indicators. This is a simple indicator which tracks effective Money Flow - volume multiplied by a price change from the middle point: VAO = Volume x (Close - (High + Low) / 2).
As with all Money Flow based technical indicator, the Volume Accumulation Oscillator is sensitive to a single volume spikes. Therefore, when it comes to intraday analysis, it is important to use it on the modulated volume. Otherwise, the volume spikes usually recorded at the market open and at the market close will disorder this indicator.
On a stock chart below, you may see how the VAO indicator looks like.
The VAO indicator is less choppy that some of the other Money Flow technical indicators (Twiggs Money Flow). It could be compared to Chaikin Money Flow. They have some similarities in calculations and looks. They are analyzed and traded in the similar way as well.
One of the most common way in technical analysis to trade the VAO indicator is to generate trading signals on the crossover of this oscillator and zero-center line around which it oscillates: buy when it crosses above zero and sell when it crosses below zero. Also, there are other points that could be considered in analysis on Money Flow. In summary when you analyze the Volume Accumulation Oscillator you may look at
- Direction of the indicator. Advancing VAO implies increasing bullish Money Flow and declining bearish Money Flow. Declining VAO points to increase in Bearish Money and decrees in Bullish Money.
- Crossovers. The moment of crossing zero center line marks the point when whether Bullish or Bearish Flow of the Money became dominant.
- Power: Depending for how long the indicator has been moving above or below zero-line, you may evaluate how strongly an analyzed stock is overbought or oversold.
- Divergence: Declining VA during price advance suggests the increasing odds of coming reversal down and advancing VAO on price decline suggests increasing odds of coming reversal up.