Negative Volume Index (NVI) on Bitcoin

What it shows

A blue NVI line steps along under the candles, going flat on every busier candle, with a slow orange EMA beside it. The index starts at 1 on the first loaded candle, so only its direction and its position against the EMA carry meaning.

How Pravex works it out

The index starts at 1 on the first candle that is loaded.
On a candle whose volume is lower than the previous candle’s, the index = index × (1 + the close’s percent change as a fraction).
On any other candle the index stays where it was.
Its orange partner is a 255-candle EMA of the index by default.
Picture an index at 1.00 (numbers made up) and a close up 2% on a candle with lower volume, the index becomes 1.00 × 1.02 = 1.02. If the next candle has higher volume, it stays at 1.02.

Settings

Setting	Default	What changing it does
Signal average length	255	How many candles go into the orange line. A shorter value follows the index closely; a longer one moves slowly.

How traders read it

No marks sit on this pane. What matters is which way the blue line is heading, and whether it sits above or below the orange line.

Blue above orange is read as price gaining on the quiet candles, blue below as price leaking on them. Only candles with falling volume move it.

A rising line means that candles with falling volume closed higher, on balance. Compare its direction with the price chart: if they disagree, the quiet candles and the busy ones are telling different stories.

When it misleads

The level of the index depends on where the loaded data starts, so compare slopes and crossings, not numbers. A volume that dips by a hair counts the same as a big drop, and the candle’s whole move is added. The 255 EMA needs 255 candles, about ten days of hourly bitcoin, so it appears late on a chart. Bitcoin trades around the clock, so there is no session gap: each candle is compared with the one just before it.

Questions and answers

Why does the NVI go flat for long stretches?

It only moves on candles where volume was lower than the candle before. During a busy run every candle out-trades the last, so the line waits.

Why does the Negative Volume Index start at 1?

It is a running index that begins at 1 on the first loaded candle. Its level depends on where the data starts, so look at the direction and the EMA cross.

NVI or PVI: which one tracks the quiet candles?

The NVI. It moves on candles where volume fell, while the Positive Volume Index moves on candles where it rose.

Why 255 for the EMA?

It is the Pravex default for the orange line, roughly a year of daily candles. You can change it, and a shorter value makes the orange line follow the index closely.