The Negative Volume Index (NVI) is a technical indicator that tracks price movements when trading volume decreases compared to the previous day. It is often used to gauge the behavior of informed or institutional traders, as these traders are believed to be more active on days with lower volume. When the NVI rises during low-volume periods, it suggests that prices are moving up quietly, which can be a bullish signal. Conversely, a declining NVI during lower-volume days may indicate that informed traders are selling, which can be a bearish sign. Traders often use the NVI with a long-term moving average, such as the 255-day EMA. A bullish signal is generated when the NVI crosses above its moving average, signaling potential upward momentum. A bearish signal occurs when the NVI crosses below its moving average, indicating potential downward pressure. Pairing the NVI with the Positive Volume Index (PVI) helps traders identify market tops and bottoms, with NVI representing smart money activity.
