The Use of Price-Volume Crossover Patterns in Technical Analysis
S. Kaufman, Marc Chaikin · 1991
Background and Methods. The routine use of price-volume crossover signals as a means of forecasting future stock or commodity price move- ment has been gaining popularity lately due to the availability of software to simplify the analysis. In this study we tested 24 unique crossover patterns and identified their forecasting performance. Cross- overs are classed by both pattern and the elapsed time for the pattern to develop. For each pattern, we analyzed how much better one could forecast price direction 5,10,15, and 20 days in the future, given that the elapsed time for the cross to develop spanned TITLE: Price-Volume Crossover Derivations the same number of days. We used approximately one hundred and twenty five thousand days of daily stock and commodity data bundled together in our evaluation. At least 100 occurrences for each cross- over pattern were used in the analysis. Results: The results suggest that several pat- terns are significant and could be used to improve a stock or commodity price forecast. The most nega- tive cross within the test window was II-B, which occurs when price drops on decreasing volume, rises on light volume and then drops again on increasing volume. It was interesting that the converse pattern