On-Balance Volume
A volume-based indicator that tracks cumulative buying and selling pressure.
On-Balance Volume (OBV) keeps a running total of volume, adding volume on up days and subtracting it on down days. The idea is simple: volume precedes price. If OBV is rising, buyers are accumulating. If it's falling, sellers are distributing.
Why It Matters
OBV reveals whether volume supports the current price trend. If price is rising but OBV is flat or declining, the rally may lack conviction. If OBV is rising while price is flat, smart money may be quietly accumulating before a move.
Settings Explained
Direction — Bullish, bearish, or both.
Signal Period — A smoothing period applied to OBV to create a signal line for crossover detection.
Look Back Mode — How far back to calculate.
Example Use Case
You combine OBV with a price breakout strategy. When price breaks above resistance AND OBV is rising (confirming volume supports the move), the strategy enters long. Breakouts without volume confirmation are ignored.
OBV divergence from price is one of the strongest signals: if price makes a new high but OBV doesn't, the rally is weakening. The reverse also applies — OBV making new highs while price lags often precedes an upward breakout.