Positive Volume Index (PVI)
The Positive Volume Index (PVI) is a cumulative volume indicator that focuses on days when volume increases from the previous session. While the Negative Volume Index tracks subtle moves by informed traders, the PVI focuses on public-driven moves, often linked to excitement, hype, or panic.
The idea is simple: when volume spikes, the crowd is active—and this activity can fuel short-term moves, or reveal when a trend might be losing steam.
How PVI Works
The PVI only updates on days when volume is higher than the previous day:
If price rises, the PVI increases
If price falls, the PVI decreases
If volume is unchanged or lower, PVI stays flat
This creates a line that reflects how price reacts on high-volume days, showing you how responsive the market is to bursts of activity.
| Volume Behavior | PVI Reaction |
|---|---|
| Volume ↑ and Price ↑ | PVI increases → crowd-driven buying |
| Volume ↑ and Price ↓ | PVI decreases → crowd-driven selling |
| Volume ↓ | No update → calm day, no crowd movement |
Most traders plot a moving average (like the 255-day EMA) alongside the PVI to confirm trend strength.
How Traders Use It
The PVI is often used to:
Spot Momentum
If PVI is rising sharply, the crowd is engaged. Price may follow—temporarily.
Confirm Trends
A rising PVI above its moving average suggests strong retail participation.
Warn of Exhaustion
If price is rising but PVI weakens or diverges, the crowd may be losing interest.
Example Setup
Imagine a stock is rallying, and volume suddenly increases. The PVI spikes as price breaks a major resistance.
That’s confirmation.
You enter long, knowing that the public is jumping in and pushing the move. But you also keep an eye on the PVI. If it starts falling while price holds flat, it could mean enthusiasm is fading—and a pullback may be near.
Pros and Cons of Using PVI
Pros
Highlights crowd behavior on high-volume days
Confirms momentum during breakouts or rallies
Useful for timing entries when retail traders are active
Works well with moving average filters
Cons
May generate false signals in choppy markets
Can be overly reactive during volatile news events
Less effective on low-volume or illiquid assets
When to Use the Positive Volume Index
Use the PVI when you want to track crowd-driven energy—especially during fast-moving market conditions. It gives you insight into how the general public is reacting on big volume days, helping you enter with momentum or avoid getting caught in fading hype.
Whether you’re riding short-term breakouts or watching for tops during volume surges, the Positive Volume Index helps you see what the public is doing—and whether it’s time to ride the wave or step aside. Next up Trading Volume Index (TVI)