Price and Volume Trend

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Price and Volume Trend (PVT) is a technical analysis indicator intended to relate price and volume in the stock market. PVT is based on a running total volume, with volume added according to the percentage change in closing price over the previous close.

The formula is

$PVT = PVT_{prev} + volume \times { close_{today} - close_{prev} \over close_{prev} }$

The starting point for the PVT total, ie. the zero point, is arbitrary. Only the shape of the resulting indicator is used, not the actual level of the total.

PVT is similar to On-balance Volume (OBV), but where OBV takes volume just according to whether the close was higher or lower, PVT includes how much higher or lower it was.

PVT is interpreted in similar ways to OBV. Generally the idea is that volume is higher on days with a price move in the dominant direction, for example in a strong uptrend more volume on up days than down days. So when prices are going up, PVT should be going up too, and when prices make a new rally high, PVT should too. If PVT fails to go past its previous rally high then this is a negative divergence, suggesting a weak move.