Description:
On Balance Volume (OBV) is a cumulative volume-based indicator that measures buying and selling pressure by tracking whether volume is flowing into or out of a security. It is calculated by adding the day's volume when the closing price is higher than the previous close and subtracting it when the closing price is lower. By analyzing OBV trends, traders can gain insight into the strength of a price move, as rising OBV suggests increased demand while falling OBV indicates increased selling pressure.
Input Parameters:
n/a
Use Cases:
- Overall Trend: When the OBV line is rising, it suggests that buying pressure is increasing, and the price may follow an upward trend. Conversely, a falling OBV line indicates that selling pressure is increasing, which could lead to a downward price trend.
- Trend Reversals: When the OBV line diverges from the price trend, it could signal a possible trend reversal. For example, if the price is increasing, but the OBV line is declining, it might indicate that buying pressure is weakening, and the upward trend may soon reverse.
- Confirm Breakouts: A breakout occurs when the price moves outside a predefined support or resistance level. The OBV can be used to confirm these breakouts by ensuring that the volume supports the price movement.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our Learning Center Article.
Mar 5, 2025