Technical Analysis, moving average, volume moving average, VMA, volume, charts, Nasdaq, market sentiment

This is an indicator used in charts and technical analysis. It refers to the average volume of a security, commodity or index constructed in a period as short as a few minutes or as long as several years and shows trends for the latest interval. As each new variable is included in calculating the average, the last variable of the series is deleted.

This has to be one of the most important tools for our indicators. This is where you select the moving average period to apply to the volume. Normally, volume can be somewhat turbulent and you may see surges here and there due to some large trades. With the volume moving average (VMA) you can smooth out those fluctuations so you can see where the general direction of the volume is going (i.e. increasing or decreasing).

Generally, when an index decreases and a volume moving average increases at the same time, you can expect a reversal in the index at the point the VMA surge peaks and begins to decrease again. The same is true for when an index is increasing.

MarketVolume® has created volume moving averages (VMA) ranging from periods of 5-minutes to 60-days, for all of its indicators. These VMAs are used to smooth out volume surges so that you can see volume as a trend and not just random surges.

Below is a list of recommended VMA settings for every period in our charts. We recommend the following VMA settings because they tend to work the best in showing signals of future market trends.

Table #1: Recommended VMA settings

Period	SBV VMA Period	Fast VMA	Slow VMA	1 bar value

Intraday Indicators
2-Hour Period	1-20 bars	1-20 bars	40-100 bars	1 minute
1-Day Period	5-30 bars	5-30 bars	60-100 bars	1 minute
Short-Term Indicators
5-Day Period	7-25 bars	7-25 bars	70-200 bars	5 minutes
15-Day Period	7-25 bars	7-25 bars	70-200 bars	15 minutes
30-Day Period	7-25 bars	7-25 bars	70-200 bars	30 minutes
60-Day Period	7-25 bars	7-25 bars	70-200 bars	1 hour
Mid-Term Indicators
3-Months Period	3-8 bars	3-8 bars	40-80 bars	1 day
6-Months Period	3-8 bars	3-8 bars	40-80 bars	1 day
1-Year Period	3-8 bars	3-8 bars	40-80 bars	1 day
1.5-Year Period	3-8 bars	3-8 bars	40-80 bars	1 day
2-Year Period	3-8 bars	3-8 bars	40-80 bars	2 days
Long-Term Indicators
3-Year Period	3-8 bars	3-8 bars	40-80 bars	3 days
4-Year Period	3-8 bars	3-8 bars	40-80 bars	3 days
5-Year Period	3-8 bars	3-8 bars	40-80 bars	5 days
7-Year Period	3-8 bars	3-8 bars	40-80 bars	7 days
10-Year Period	3-8 bars	3-8 bars	40-80 bars	10 days
Weekly	3-8 bars	3-8 bars	40-80 bars	1 week
Monthly	3-8 bars	3-8 bars	40-80 bars	1 month

Be careful! You should not set the volume moving average too high or too low, as you will either smooth out the volume too much or make it too erratic. For example, on a 5-day chart, a 60-minute VMA works best, and for a 1-day chart, a 30-minute VMA works well.

On the charts below you can see a view of charts with different VMA settings for the NASDAQ Exchange.

As you can see, it's difficult to recognize signals on the above chart without a VMA. Yes, if you have more then 20 years U.S. markets experience it would be enough, but it's much easier if you have a VMA:

Now that you can see all movement of the volume during this period of time, you can see the market sentiment. Using navigation lines you can tie price and volume and get a clear picture of their relationship.

If you want to see the most important movements of the volume all you have to do is just increase the VMA period:

The same Exchange, the same chart, but the VMA is different and turning-point volume signals become more clear. You can go even further and make the period of VMA 120 minutes:

We recommend that you to experiment with the VMA periods to find the best one for your technical analysis.

Volume Based Technical Analysis

Volume Moving Average (VMA)

Volume Moving Average - VMA