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2011issue C0517-24

A volume zone oscillator conditioned by an Average Directional Index filter

The volume zone oscillator measures the share of smoothed volume occurring in the bullish versus bearish direction. In the archive workflow that reading is paired with an Average Directional Index filter and a moving average, so the same zone crossings are not treated as one rule set in every market.

  • The volume zone oscillator is a scaled ratio of smoothed signed volume to smoothed unsigned volume and is read against fixed zones from -100 to +100.
  • When the Average Directional Index is below 18, the market is treated as nontrending, the price-to-moving-average relationship is ignored, and the oscillator seldom reaches the outer extremes.
  • In that nontrending regime a long setup is defined as the oscillator crossing up through -40, while readings between -40 and +40 are described as a balance between buyers and sellers.
  • The source presents two hypothetical gold-ETF oscillator trades as closing-price illustrations, without a stop-loss rule and without a claim that the same results would recur.
Entries in this reading3 entries
Current trackAverage Directional Index71 readingsVolume-price analysis129 readingsMoving average449 readings

What the oscillator measures

The volume zone oscillator is a Volume-price analysis reading defined as 100 times the ratio of an exponential moving average of signed volume to an exponential moving average of unsigned volume over the same lookback. Volume is signed positive when the close is higher than the prior close and negative otherwise, so the oscillator measures the share of smoothed volume occurring in the bullish versus bearish direction.

Fixed zones and late buying or selling

The oscillator is scaled from -100 to +100 and is read against fixed zones at +60, +40, +15, zero, -5, -40, and -60. Readings between -40 and +40 are described as a balance between buyers and sellers. The -40 to -60 band is treated as late selling, and the +40 to +60 band is treated as late buying.

A weekly index example

A weekly Dow Jones Industrial Average example combines the oscillator with a 60-period exponential moving average and a 14-period Average Directional Index. That pairing of Volume-price analysis, a Moving average, and the Average Directional Index is used to label accumulation, participation, and distribution phases.

How a nontrending regime changes the rules

When the Average Directional Index is below 18, the market is treated as nontrending, the price-to-moving-average relationship is ignored, and the oscillator seldom reaches the +60 or -60 extremes. In that nontrending regime, a long setup is defined as the oscillator crossing up through -40.

Hypothetical closing-price illustrations

The source presents two hypothetical gold-ETF oscillator trades as closing-price illustrations. Those illustrations do not include a stop-loss rule and do not claim that the same results would recur.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
40 of 56 in the Average Directional Index track
201125-30 pp.Next on Average Directional IndexCandlestick names need volume-price, ADX, and moving-average checksA candlestick name is an untrusted label until a same-bar Volume-price analysis structure, an Average Directional Index regime check, and a moving-average location filter all allow the hypothesis to stand.
All readings on this track · 56 readings
  1. 1986Cycle-aligned directional trend indicator
  2. 1987What crossover and directional entry rules actually compare
  3. 1988A directional-line cross needs a trend filter, an extreme-point rule, and a dollar stop
  4. 1988Constructing true range by offset addressing
  5. 1988Constructing directional movement from bar range
  6. 1988Average directional index construction: recursive smoothing and lookback offset
  7. 1988Staged Average Directional Index construction with Relative Strength Index confirmation and stop alerts
  8. 1988Average Directional Index construction with frozen true range and directional rules
  9. 1991Constructing the average directional index from range expansion and true range
  10. 1991Constructing five-session forecasts from stochastic, ADX, and MACD inputs
  11. 1993Constructing the average directional index from directional movement and true range
  12. 1993Confirming n-bar breakouts with ADX and DX filters
  13. 1994Constructing a Bollinger band-width trend filter
  14. 1994A pre-trade checklist that can refuse a long three ways
  15. 1997An ADX threshold and a moving average as a trend filter
  16. 1998Regime filters for mutated indicators
  17. 1999Building the average directional index from range extension and true range
  18. 2000Evaluating ADX, RSI, and moving averages in a multi-stock warehouse
  19. 2000Stochastic pop as a filtered continuation setup
  20. 2000Onset and exit from one average directional index
  21. 2002Joint ADX and MACD readout for trend strength and direction
  22. 2003Adaptive Donchian breakout with implied volatility and volume
  23. 2004The average directional index as a regime gate for the relative strength index and the stochastic oscillator
  24. 2004Constructing true-range-specified volume as a directional filter
  25. 2005Constructing a multi-filter penny stock breakout procedure
  26. 2005Construct one playbook that flips with session regime
  27. 2005Combining Bollinger Bands, the average directional index, and Fibonacci retracement on currency pairs
  28. 2006Assembling an adaptive price zone from double-smoothed averages
  29. 2006An ADX strength gate for MACD and the stochastic oscillator
  30. 2007Directional movement as a filter plus trigger
  31. 2007Constructing a veto-first trend permission stack
  32. 2007ADX gates for trend end, range, and reversal
  33. 2008Constructing a nine-cell directional-ratio grid
  34. 2008Average directional index and directional trend indicator lookbacks as trend-filter parameters
  35. 2008A holding-matched market lens from averages and directional-line crosses
  36. 2008A nine-cell directional scoreboard for multi-horizon entries
  37. 2010Building a Vortex Indicator from high-low distances
  38. 2010Constructing ADX, RSI, and MACD price filters
  39. 2011Constructing a volume zone oscillator with a moving-average and Average Directional Index regime filter
  40. 2011A volume zone oscillator conditioned by an Average Directional Index filter
  41. 2011Candlestick names need volume-price, ADX, and moving-average checks
  42. 2012Clustered average-directional-index traces as a trend-start filter
  43. 2012Average Directional Index cluster filters for trend-start signals
  44. 2012Confirming a trend start or turn with a triple ADX cluster
  45. 2013Constructing a late-entry stack from a signed DMI oscillator
  46. 2013A directional oscillator and its stochastic as a stacked timing filter
  47. 2013ADX cluster lookbacks are a locked specification, not a chart label
  48. 2013Combining moving averages, stochastics, and ADX in a daily scan
  49. 2015Assembling the Average Directional Index from directional movement
  50. 2016How an Average Directional Index filter and a breakout entry form one procedure
  51. 2016Score RSI and stochastic crossings only when ADX confirms the trend
  52. 2018Constructing an ADX filter for intraday breakouts
  53. 2018An ADX volatility gate for prior-day breakouts
  54. 2019Exponential deviation bands with a moving average, RSI and ADX
  55. 2020A normalized-slope trend filter from linear regression
  56. 2020Gating volatility-momentum divergences with a Trend filter
By fieldIndicators and filters682 readingsBy year201165 readings
All 71 readings tagged Average Directional Index
Also on Average Directional Index5 readings
2011Candlestick names need volume-price, ADX, and moving-average checks2011Constructing a volume zone oscillator with a moving-average and Average Directional Index regime filter2004Constructing true-range-specified volume as a directional filter1997An ADX threshold and a moving average as a trend filter2000Evaluating ADX, RSI, and moving averages in a multi-stock warehouse