Ekambit Volume Strength Index (EVSI) is an innovative volume strength oscillator, which makes use of long-term historical volume strength as well as real-time volume strength in an easy to use format.
We at Ekambit Technologies use it daily, together with ESI indicator, with consistent success in the Indian and US markets.
- Green line above mid-zone & rising: uptrend
- Green line falling from high-zone: uptrend reversal
- Red line below mid-zone & falling: downtrend
- Red line rising from low-zone: downtrend reversal
- Blue line: transition middle-zone (wait to enter, or exit on opportunity)
For greater conviction before entering a trade, enable the "Show Trend" option, which compares recent volume strength with long-term historical volume strength.
The purple dotted line (around 65) shows the long term historical volume trend strength.
The green shaded area indicates that current volume trend strength at 10 May '21 12:50 was around 5% stronger than historical, which provides greater conviction to enter Short as shown by EVSI indicator. This delta (recent minus historical) is shown as shaded green (above) or purple (below) base 50, the middle line of EVSI.
It provides you with an easy visually perceptible output.
Two more examples are shown below, where EVSI indicator is used together with ESI indicator, for greater conviction while entering and exiting trades. The reasoning behind each trade is shown in the charts.
Sample inputs for 5-min and 15-min charts is shown below. The indicator is effective for intraday timeframes as we have backtested as well as deployed on the live market.
Just like price has memory, volume has memory. Volume indicates the collective outcome of all market participants. A larger number of participants makes it easier to predict the volume trend in a probabilistic manner.
Hence Index Futures like CME_MINI:ES1! and NSE:NIFTY1! are better suited for volume analysis than individual stocks which can be less liquid, with price more easily influenced by a large buyer or seller.
For Futures which trade almost 24x7, it's better to choose the high volume time periods i.e. when local Equity market is Open, rather than the overnight illiquid time periods.
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