Volume Zone Oscillator (VZO)

Volume Zone Oscillator (VZO) measures volume alongside price movement. It is based on the simple idea of combining both price action and volume into a single indicator. Differently from On Balance Volume indicator, the VZO also involves time into its formula, using exponential moving averages instead of recent data.

According to Walid Khalil, who firstly explained the Volume Zone indicator in the May 2011 issue of Stocks and Commodities magazine, it can be used in three ways:

  1. Trading Overbought/Oversold market, whether the indicator reaches the +40 (Sell Signal) or -40 (Buy Signal) levels.
  2. Identifying Divergence points between VZO Indicator and Price line we can take profit on hidden weakness of the market.
  3. Trading Crossover of Volume Zone Oscillator with the centerline. If the VZO crosses the 0.0 level from above, the market is bearish. Otherwise, price will be uptrending.

Volume Zone Oscillator


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