OBV (On-Balance Volume) — Complete Reference
Cumulative volume indicator tracking buying vs selling pressure over time.
What OBV measures
On-Balance Volume, developed by Joseph Granville in 1963. Cumulative running total of volume: added when price closes higher than prior bar, subtracted when it closes lower. The resulting line shows smart-money accumulation/distribution patterns.
Reading OBV signals
Rising OBV with rising price = healthy uptrend. Rising OBV with flat or falling price = hidden accumulation (often precedes a breakout). Falling OBV with rising price = distribution into strength (often precedes a top).
OBV divergence — the strong signal
When price makes new highs but OBV makes lower highs = bearish divergence (distribution while price holds up). When price makes new lows but OBV makes higher lows = bullish divergence (accumulation at lower prices). Among the more reliable volume-based signals.
OBV trend line breaks
Drawing trend lines on OBV often reveals structure earlier than price-based trend lines. An OBV trend line break before a price trend line break is a leading signal — often gives 1-3 days of warning.
Where OBV shines
Stocks with consistent, transparent volume reporting. US equities, major ETFs. OBV's signals on these instruments are reliable and well-documented.
Where OBV fails
Crypto exchanges with significant wash-trading. Some altcoins have inflated volume that distorts OBV. On major coins (BTC, ETH on regulated exchanges) OBV is reasonable; on smaller coins it can be misleading.
Combining OBV with price action
OBV alone is weak. OBV + price action structure = strong. Best use case: identify divergence between price and OBV, then wait for price-action confirmation (break of swing low/high) before entering.
Free OBV charting
Most platforms support OBV natively. Use it as a secondary confirmation, not a primary entry signal. Pair with momentum (RSI, MACD) and trend (ADX, MAs) for complete signal stack.