This tool determines a specific measurement related to market activity by analyzing price and volume data. It facilitates the observation of relative buying and selling pressure. For example, if the indicator value increases despite a minor price change, it may suggest substantial accumulation or distribution is occurring.
Analysis of this measurement can be beneficial in identifying potential trend reversals and confirming trend strength. Historically, such calculations have been used by technical analysts to gain a deeper understanding of market dynamics, moving beyond simple price charts. Its application allows for a more nuanced interpretation of supply and demand.