The theory behind the indexes is as follows: On days of increasing volume, you can expect prices to increase, and on days of decreasing volume, you can expect prices to decrease. This goes with the idea of the market being in-gear and out-of-gear. Both PVI and NVI work in similar fashions: Both are a running cumulative of values, which means you either keep adding or subtracting price rate of change each day to the previous day`s sum. In the case of PVI, if today`s volume is less than yesterday`s, don`t add anything; if today`s volume is greater, then add today`s price rate of change. For NVI, add today`s price rate of change only if today`s volume is less than yesterday`s.
Hi, I do not know if this the right place to post such a query, but I am really not able to understand how to read this indicator. What do positive and negative values mean in this case? What is the range of this indicator? What does it mean to have a negative NVI value? and similarly a positive NVI value? Some of the other sites record values like 1.1 or 0.98 on the y scale of PVI and NVI, what is the meaning of those values and how do your values differ from those?
HPotter
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@comp1810, This can be a trend indicator. If values going up then market "go up"