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The Negative Volume Index ( NVI ) is a cumulative indicator which only moves when volume is decreasing. The Underlying premise behind this indicator is that 'informed' investors take their positions on days of low volume, whereas the general public take their positions when volume is increasing.
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The assumption behind this indicators is that it shows what the 'smart' investors are doing, since it only reacts on decreasing volume days. It is best used as a divergence indicator, and as such is best used as a support to more direct indicators and analysis. |
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