OBV (On Balance Volume)

On Balance Volume (OBV) is a cumulative momentum indicator that relates volume to price change. Developed by Joseph Granville in 1963, OBV adds volume on up days and subtracts volume on down days, creating a running total that reflects buying and selling pressure.

OBV is calculated as a running cumulative total:

If Close > Close_prev → OBV = OBV_prev + Volume
If Close < Close_prev → OBV = OBV_prev - Volume
If Close = Close_prev → OBV = OBV_prev

The absolute value of OBV is not important — what matters is the direction and shape of the OBV line.

• Cumulative indicator — no fixed range, grows or shrinks over time
• Leading indicator — OBV often moves before price, giving early signals
• No parameters — OBV requires no configuration, it uses raw volume data
• Direction matters — rising OBV = accumulation, falling OBV = distribution

Trend confirmation

• Rising OBV + Rising price — uptrend is confirmed by volume
• Falling OBV + Falling price — downtrend is confirmed by volume

Divergence (early warning)

• Bullish divergence: Price makes a lower low, but OBV makes a higher low — smart money is accumulating
• Bearish divergence: Price makes a higher high, but OBV makes a lower high — distribution is occurring

Breakout confirmation

• If price breaks a resistance level and OBV also breaks its resistance — breakout is likely genuine
• If price breaks out but OBV doesn't confirm — possible false breakout

OBV has no configurable parameters. It uses the close price and volume of each candle.

| Condition | Meaning | |-----------|---------| | OBV cross_over OBV_SMA(20) | OBV crosses above its moving average — bullish | | OBV cross_under OBV_SMA(20) | OBV crosses below its moving average — bearish | | OBV > 0 | Cumulative buying pressure is positive | | OBV < 0 | Cumulative selling pressure is dominant |

• OBV works best in trending markets; less useful in choppy/sideways conditions
• Combine OBV with price action and moving averages for stronger signals
• OBV divergence with price is one of the most reliable volume-based signals
• Use OBV on higher timeframes (4h, daily) for more reliable trend confirmation
• The absolute OBV value is irrelevant — focus on its direction and divergences