What is on-balance volume (OBV)?

The balance volume, invented by Joseph Granville, is a very curious technical indicator 📊. It predicts price movements through volumes. The idea is simple. Volume leads price.

How does it work? It accumulates volume on rising days. It subtracts on falling days. If the price closes higher, we add volume to OBV. Lower? We subtract. This is how this line appears. It shows the struggle between buyers and sellers 🔍.

OBV helps to see a lot:

• Breakthroughs of resistance
• Trend confirmation
• Price and volume divergence

It seems interesting when OBV rises to new highs while the price has not yet. Bullish divergence! Looks like a signal for a reversal upwards 🚀. And bearish? That's when OBV falls to new lows. Not a good sign for the price 📉.

Of course, OBV does not always work perfectly. During sharp volume spikes, it gets a bit off track. It's better to wait here.

By 2025, traders are still using OBV, especially in wild markets. But it's not enough on its own. Other tools are needed for the full picture 🌕. It's not that perfect.