The Volume Accumulation Oscillator measures the flow of volume in to and out of a security. It is a variation of the On Balance Volume indicator. The indicator is based on the premise that the more volume that accompanies a price move, the more significant that price move will be.

As the VAO rises, it signals that volume is flowing into a security on higher prices, and this usually evidences that the trend will continue until the volume falls away. The VAO will quite often begin to decline before a fall in the security.

Divergences between the VAO and the security's price are a good advance signal that a change in trend is imminent. A divergence has occurred when the VAO has moved lower but the stock has made a higher high. Prices usually change to confirm the VAO shortly after this has occurred.

The closing price is used in this calculation (same price used in RSI calculation). Typically, a period of 14 (bars or days) of RSI is used.

References

Williams, L. How I made a Million Dollars Last Year Trading Commodities.