I just noticed that the analysis tool called On Balance Volume is an indicator that many people overlook, even though it has tremendous value in reading the market accurately.

Let's take a look at what On Balance Volume really is and why professional traders use it so often.

OBV, or On Balance Volume, is an indicator invented back in 1963 by Joseph Granville. He believed that trading volume is what truly drives prices, not just price changes driven by emotions, as many think. This is exactly why On Balance Volume is such an important tool.

Its working method is quite simple: if today's closing price is higher than yesterday's, the trading volume is added; if the closing price is lower, it is subtracted. If the price remains the same, it doesn't change. Through this accumulation, we can see the true buying and selling pressure and its direction.

A very important aspect is observing divergence: when the price reaches a new high but OBV does not make a new high, it signals that buying pressure may be waning. A seemingly strong trend could be weakening. Conversely, if the price drops but OBV does not decline or starts to rise, it could indicate selling pressure is diminishing and the price might reverse upward.

Using On Balance Volume helps us avoid false trends. When combined with Moving Averages or Bollinger Bands, its accuracy increases. I have used it with JPYUSD on a 1-hour chart, and it helped identify reversal points before the price moved significantly. For example, looking at Microsoft on a daily chart: previously, the price kept making new highs along with rising OBV, but when OBV stopped making new highs, the price also stopped rising and reversed downward. That was a clear signal that buying momentum was fading.

In simple terms, On Balance Volume is a tool that shows us who is controlling the market—buyers or sellers. Price alone can be deceptive, but accumulated trading volume reveals the truth. I recommend trying OBV if you haven't used it before.