On-Balance Volume (OBV)
On-Balance Volume
Adds volume on up bars and subtracts it on down bars; confirms or diverges from the price trend.
How to read it
On-Balance Volume adds the day's volume when price closes up and subtracts it when price closes down, so the running line reflects whether volume is flowing in or out. The absolute value doesn't matter — the direction and slope do.
Trading signals
OBV is mainly a confirmation tool: a rising OBV alongside rising price confirms the up-move has volume behind it. The powerful signal is divergence — price making a new high while OBV doesn't (volume isn't supporting it) warns the move may fail.
Parameters
OBV Period applies a smoothing average to the raw cumulative line, so its slope is easier to read; a longer period smooths more but lags.
- OBV Period
- Smoothing length applied to OBV.