On Balance Volume
Volume, OBV
- What it shows
On Balance Volume adds volume after an upward close and subtracts it after a downward close. Its direction and changes matter more than its absolute level.
- How it is built
OBV goes up by the bar's volume if the close is higher than the previous one, and down by it if lower.
- How to use it
- A rising OBV with a rising price confirms the move.
- A divergence between OBV and price is a warning.
- The level does not matter, only the direction and shape.
- History
Introduced by Joseph Granville in his book Granville's New Key to Stock Market Profits (1963).
Joseph Granville, 1963
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