Recently, I've been observing how many traders use the OBV indicator to buy the dip and sell the top; it’s quite interesting. Many people actually don’t realize the true power of this tool.

Honestly, the most practical use of the OBV indicator isn’t looking at the absolute values, but rather at the "mismatch" between price and volume. I’ve found that most retail investors overlook this point. When you see volume decreasing but the price isn’t following down, what does that usually mean? Generally, it’s a sign that it’s time to act. Conversely, when volume is increasing but the price isn’t rising in tandem, that’s actually a buy signal.

The logic behind this is simple—price will ultimately follow volume. In any case, this divergence usually indicates an upcoming turning point. Using the OBV indicator to identify such divergences can help you spot trend reversals early or confirm the authenticity of a trend.

But there’s one thing I’ve always wanted to remind everyone about. Experienced institutional investors play very cleverly. They artificially push up the price to create a false upward momentum, just to attract retail investors to follow. When retail sees the price rising, they’re afraid of missing out and rush to buy. Once everyone is in, the institutions start to unload. That’s why sometimes you see the OBV indicator looking perfect, but the market suddenly reverses.

So, the key to using the OBV indicator well isn’t just understanding the indicator itself, but also recognizing these artificially created false trends. When you notice volume decreasing while the price is still holding up, or volume increasing but the price isn’t moving up, it’s often time to stay alert. These abnormal phenomena can help you avoid unstable, manipulated markets. With more observation in practice, you’ll gradually feel the true buying and selling forces versus fake price movements in the market.