Q: Key features

- **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

Q: Trend confirmation

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

Q: 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

Q: 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

Q: Parameters

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

Q: Example conditions

| 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 |

Q: Tips

- 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

Question 1

What is OBV?

Accepted Answer

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.

Question 2

How it works

Accepted Answer

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.

Question 3

Key features

Accepted Answer

- **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

Question 4

Trend confirmation

Accepted Answer

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

Question 5

Divergence (early warning)

Accepted Answer

- **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

Question 6

Breakout confirmation

Accepted Answer

- 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

Question 7

Parameters

Accepted Answer

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

Question 8

Example conditions

Accepted Answer

| 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 |

Question 9

Tips

Accepted Answer

- 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