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One of the well-known general indicators that I see many traders overlook quickly despite its great usefulness:
OBV — On Balance Volume
The idea behind the indicator is simple but very clever:
It doesn't just look at the price, but tries to read:
Is the volume truly supporting the movement or not?
In simpler terms:
If the candle closes bullish, the indicator adds its volume
And if it closes bearish, it subtracts its volume
Then it builds a cumulative line that helps you understand:
Is the liquidity entering with the rise?
Or is it exiting even though the price still looks good?
What does OBV practically offer you?
• Helps you read the relationship between price and volume in a simple way
• Useful for observing whether the rise or fall is truly supported
• May help you spot some weakness or accumulation phases before they become clear on the price
• Becomes very useful when comparing price highs and lows with OBV highs and lows
• Serves as an excellent confirmation tool, not as a standalone entry signal
Where does its real value lie?
When you see the price rising but OBV does not confirm this rise,
Here you start asking:
Is the movement truly real?
Or is the price moving without convincing volume support?
And conversely:
If the price remains steady or slow,
But OBV rises more clearly,
This could be an important hint that there is volume activity worth paying attention to.
But very importantly:
OBV is not a “buy/sell directly” tool
But a tool that helps you understand:
Is the volume moving with the price or against it?
Its best use:
• With the overall trend
• With support and resistance levels
• With breakouts
• With monitoring divergences between it and the price
• As a confirmation tool before making a decision, not as a sole decision
Summary:
If you want a simple indicator in concept but powerful in revealing the quality of movement,
OBV is one of the most important volume indicators worth having on your screen.
Do you use OBV as a confirmation tool, or do you not see much benefit in it?