Key Takeaways
On-Balance Volume (OBV)
Cumulative indicator that adds volume on up days and subtracts on down days. Shows buying/selling pressure.
Formula
Detailed Explanation
On-Balance Volume (OBV) was developed by Joe Granville. It creates a running total of volume, adding volume on up days and subtracting on down days.
Key Concept:
Volume precedes price. Changes in OBV often lead price movements.
Trading Applications:
- Trend Confirmation: OBV trending with price
- Divergence: OBV and price disagreement
- Breakout Confirmation: Volume supporting breakouts
Trading Setup Example
Entry, stop loss, and take profit levels.
Always wait for signal confirmation before entering a trade.
Where This Indicator Works Best
Trend context and market position.
Confirms price moves through volume analysis.
Live Chart ā On-Balance Volume (OBV)
See On-Balance Volume (OBV) in action on a live chart. Try changing the settings and timeframe.
š Bullish Signals
OBV rising while price consolidates, bullish divergence
š Bearish Signals
OBV falling while price consolidates, bearish divergence
Python Implementation
OBV calculation
TradingView Pine Script
MT5 MQL5 Code
Python Libraries
Common Mistakes
Confirmation Signals
Best For
š” Pro Tips
- ā¢OBV divergence is a powerful leading indicator
- ā¢Works best in markets with reliable volume data
- ā¢Trend in OBV should confirm price trend
Educational Disclaimer
This content is for educational purposes only and does not constitute financial or investment advice. Trading involves significant risk and you may lose your capital. Always consult a licensed financial advisor before making investment decisions.
Frequently Asked Questions
Related Indicators
Money Flow Index (MFI)
Volume-weighted RSI that measures buying and selling pressure using price and volume.
Accumulation/Distribution Line
Cumulative indicator measuring money flow based on where price closes within its range.
Volume Profile
Shows volume traded at each price level, identifying key support/resistance zones.