P
PipsGrowth

Key Takeaways

Difficulty:Beginner
Reliability:Moderate
Category:volume
Timeframes:1H, 4H, Daily

On-Balance Volume (OBV)

volumešŸ“Š 1H, 4H, Daily

Cumulative indicator that adds volume on up days and subtracts on down days. Shows buying/selling pressure.

Formula

Code
If Close > Close(prev): OBV = OBV(prev) + Volume
If Close < Close(prev): OBV = OBV(prev) - Volume

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

šŸ“ˆ Bullish Signals

OBV rising while price consolidates, bullish divergence

šŸ“‰ Bearish Signals

OBV falling while price consolidates, bearish divergence

Python Implementation

OBV calculation

Python
import pandas_ta as ta
df['OBV'] = ta.obv(df['close'], df['volume'])

TradingView Pine Script

Try on TradingView
JavaScript
//@version=5
indicator("OBV")
obv = ta.obv
plot(obv, "OBV", color=color.blue)
šŸ“Š Use TradingView for Advanced Charting
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MT5 MQL5 Code

C++
int obv_handle = iOBV(_Symbol, _Period, VOLUME_TICK);
double obv[];
CopyBuffer(obv_handle, 0, 0, 100, obv);

Python Libraries

pandas-ta
Technical analysis
pip install pandas-ta

Common Mistakes

āœ—Using OBV without volume data (forex spot)
āœ—Ignoring OBV divergences

Confirmation Signals

Price breakout
Trend indicators

Best For

Volume confirmationDivergence tradingTrend validation

šŸ’” 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
Last updated: December 29, 2024

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.

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Investopedia - Technical IndicatorsBabyPips - Technical IndicatorsMetaTrader 5 Docs

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.

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