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Positive Volume Index (PVI)

What the Positive Volume Index measures, how to read it against its signal line, its settings on MillionChart and a worked example on gold.

The Positive Volume Index (PVI) is a running index that changes only on the bars whose volume rose above the previous bar's — the busy bars, where the crowd is active, so the index follows what the crowd does with price. It starts at 1,000 and has no fixed range; its level depends on where your loaded history begins, so read its direction and its position against the signal line, not the number. Paul Dysart devised it in the 1930s; Norman Fosback brought it to prices in Stock Market Logic (1976).

Positive Volume Index (signal 255) under gold, daily candles
Positive Volume Index (signal 255) under gold, daily candles

What it shows#

  • PVI — a line in its own pane under the chart. It rises when a bar closed higher than the bar before it on higher volume, falls when such a bar closed lower, and stays flat on every bar whose volume fell or stayed the same.
  • Signal — an exponential moving average (EMA) of the index, 255 bars by default, about one trading year of daily candles. The index above its signal is the bullish reading, below it the bearish one.

How it is calculated#

The index starts at 1,000 on the first bar that has a close and a volume. On each later bar whose volume is higher than the previous bar's, the index changes by the same percentage as the close did; on every other bar it keeps its value. The signal is an EMA of the index over Signal length (EMA). On gold and other CFD or forex symbols the volume is the broker's tick volume (the number of price changes in the bar), not contracts traded.

How traders use it#

  • Fosback's reading: PVI above its one-year average favours a rising market, below it a falling one. He found the Negative Volume Index the more telling of the two: the busy bars are where the crowd is right during trends and wrong at turns.
  • A cross of the index through the signal marks a change in how the busy bars are closing; treat it as a background regime read, not an entry.
  • Pair it with NVI: both rising confirms a trend; PVI rising while NVI falls shows the crowd buying what the quiet bars are selling, a classic late-trend picture.
  • Watch out for its lag and its silence: a 255-bar average turns slowly, the signal needs 255 bars before it appears, and the index moves on only part of the bars.

Settings#

SettingDefaultWhat it changes
Signal lineOnDraws the EMA of the index. Off leaves the index on its own.
Signal length (EMA)255The bars of the signal's EMA. 255 is about one year of daily candles; a shorter length reacts sooner and crosses more often.
Colours and style—The colour of the PVI line and of the Signal line.

Example on gold#

For example, gold on daily candles has risen from about $4,100 to $4,300 over three months, and PVI has climbed with it, well above its signal line: the busy bars closed up. In the last two weeks price holds near $4,300 while PVI flattens and NVI keeps rising. A trader reads this as the crowd pausing while the quiet bars are still being bought, and keeps a long position with the stop under $4,250 rather than selling the stall. PVI dropping through its signal line, with price under $4,250, would invalidate the reading.

Add it to your chart#

  1. Click Indicators in the top strip (on the Pro screen the key is I).
  2. Type pvi and click the indicator.
  3. Click its chip in the legend to open the Inspector and change the settings; drag the chip to reorder; the dot hides it; × removes it.