What is the Balance Volume (OBV)? 🔍

The Balance Volume (OBV) predicts price changes based on volume fluctuations 📊. It rises on bullish days. It falls on bearish days. That's how it works.

When the price closes higher than before, the 24-hour volume becomes "bullish" 📈. If it closes lower, it is "bearish" 📉. Simple. The OBV needs markets with real volume to make sense, as is the case with the Klinger oscillator or the money flow index.

Joseph Granville invented it 🧠. He had a fixed idea: volume dominates the markets. He seemed to firmly believe that a significant increase in volume would eventually trigger a major price movement. It is not entirely clear if it always works this way.

To identify resistance breakouts, closing prices are key 🚀. The OBV helps. But be careful. During strong volume spikes, this indicator becomes somewhat confusing. Better to wait.

Divergences can anticipate trend changes. It's as if volume is a prophet of price 🔮. Bearish divergence: OBV falls below previous lows. Bullish divergence: OBV rises above previous closes. Fascinating, isn't it?

The OBV alone is not enough 🌕. It's like cooking with just one ingredient. You need to combine it with other technical indicators. This way you get more reliable signals. No one should trade using exclusively OBV.