Volume Moving Average

A volume moving average is average volume drawn as a line through the volume histogram. Bars that poke well above the line are unusual for that window. Bars that sit under it are quiet. It is the same arithmetic as a price SMA, applied to a series that is lumpy and always non-negative. One event bar lifts the average and keeps it lifted until it ages out, which can make the next normal bars look deceptively quiet.

Traders look for a price break that coincides with a volume bar crossing well above its average, and for pullbacks where volume stays below the average. The line itself is not a signal. A cross of price has nothing to do with a cross of this line. Read them on their own panels.

Use a 20-period volume average on a daily chart as the default "is this bar special?" test. Use a short average on an intraday chart only if you also account for the U-shape of the session. Otherwise the open always looks like a breakout.

Calling a volume bar a buy because it crossed its own average. Volume still has no direction. A spike through the average on a down close is active selling pressure, or a sell program, or a liquidation. The close tells you more than the cross.

SMA lag cuts both ways. After a huge bar the average is "too high" for a while, and genuine activity can hide under it. And the average does not know the time of day.