Volume Oscillator (VOSC)

Parameters: short_period = 14 (5–50) • long_period = 28 (20–200)

Overview

The Volume Oscillator (VOSC) operates on the principle that changes in volume relative to the recent past carry more technical significance than absolute volume levels. By calculating the percentage difference between a short-term and long-term volume moving average, this indicator reveals whether recent trading activity is increasing or decreasing compared to the longer-term average. This insight helps traders distinguish between price movements backed by strong participation versus those occurring on weak volume.

The calculation formula [(Short MA - Long MA) / Long MA] × 100 creates an oscillator that fluctuates around zero, with positive values indicating rising short-term volume relative to the longer-term average and negative values suggesting declining participation. Unlike simple volume indicators, VOSC normalizes the difference as a percentage, making it easier to compare volume patterns across different securities and time periods, regardless of their absolute trading volumes.

Interpretation & Trading Signals

Zero Line Crossovers:

  • Above Zero: Short-term volume exceeds long-term - increasing market participation
  • Below Zero: Short-term volume below long-term - decreasing interest
  • Rising VOSC: Volume expansion phase, trend likely to strengthen
  • Falling VOSC: Volume contraction phase, trend may be weakening

Breakout Confirmation:

  • Support Break + Rising VOSC: Strong bearish signal with volume confirmation
  • Resistance Break + Rising VOSC: Valid bullish breakout with participation
  • Break + Falling VOSC: Weak breakout, potential false signal
  • Extreme Readings: Very high VOSC indicates climactic volume

Divergence Analysis:

  • Bullish Divergence: Price makes lower lows while VOSC makes higher lows
  • Bearish Divergence: Price makes higher highs while VOSC makes lower highs
  • Volume Fade: Trend continuing on declining VOSC suggests exhaustion
  • Accumulation/Distribution: VOSC patterns reveal institutional activity

Example Usage

Code examples will be available once the Rust implementation is complete.

Performance Analysis

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