Volume-adjusted moving average construction

Equal weight by session

A moving average is a smoother that averages ordered price observations over a defined lookback so shorter swings recede and the resulting path can be compared with later observations. In the time-based form of that smoother, each session receives the same weight of one price observation, whether activity that session is light or heavy.

Crossovers of two differently parameterized moving averages are presented as candidate turning-point signals. A moving-average crossover is a hypothesized turning-point marker formed when a faster average and a slower average change order. It is used as a chart condition to test, not as a complete decision rule.

Equivolume boxes

Equivolume construction draws each session as an equivolume box: a rectangle whose height is the high-low range and whose width is that session's volume. Equal horizontal distances then represent similar turnover rather than similar elapsed time.

The volume increment is the chosen unit of turnover that sizes a session on the horizontal axis and decides how many times that session's midpoint enters the average.

Posting the session midpoint

The session midpoint is the session high plus the session low, divided by two. It is the price value posted into the volume-adjusted average.

A volume-adjusted average is a moving average whose lookback is counted in volume increments, with each session midpoint posted once for every increment that session occupies. Those midpoint posts are then averaged over a chosen number of volume increments instead of a chosen number of days.

With a 100,000-share increment, a 97,500-share session contributes one midpoint post and a 454,300-share session contributes five.

A 20-volume or 55-volume lookback has no fixed calendar length because volume and time are not interchangeable.

Fast and slow volume averages

An 8-volume average is used as a fast locator of current price and a 55-volume average as a slower reference. Crossings of the two are used to mark hypothesized changes of character.

Heavy-volume boxes can stall the faster average or pull it quickly, so a crossover may become visible earlier or later than it would under equal-day weighting.

Supporting volume-price context

Volume-price analysis reads session importance from the pairing of range and turnover, including box width, compact wide sessions, and expanding or contracting activity around the averages.

Wide compact sessions, contracting volume, expanding range, and the gap between the two averages are treated as supporting volume-price context, not as a complete decision system.