On-Balance Volume (OBV)
Cumulative volume indicator that adds volume on up days and subtracts it on down days to reveal whether volume is confirming a price trend.
Formula
OBV_t = OBV_{t-1} + Volume_t (if Close_t > Close_{t-1});
OBV_t = OBV_{t-1} − Volume_t (if Close_t < Close_{t-1});
OBV_t = OBV_{t-1} (if Close_t = Close_{t-1})On-Balance Volume keeps a running total: when price closes higher than the previous bar, the full bar's volume is added; when it closes lower, it is subtracted. The absolute OBV level is meaningless — only its direction and divergence with price matter.
When OBV makes new highs alongside price, the uptrend is confirmed. When price makes a new high but OBV doesn't, bearish divergence warns that buying pressure is waning. OBV was developed by Joseph Granville and remains one of the most widely used volume-based indicators.
Related Terms
Accumulation/Distribution Line
Running total of volume adjusted for where the close falls within each bar's range; divergence with price highlights accumulation or distribution.
IntermediateChaikin Money Flow
Volume-weighted measure of buying/selling pressure over 20–21 periods; positive values suggest accumulation, negative values distribution.
IntermediateForce Index
Combines price direction, magnitude of move, and volume into a single oscillator; crosses above zero signal buying force, below signal selling force.
IntermediateMoney Flow Index (MFI)
Volume-weighted RSI that measures buying and selling pressure; above 80 is overbought, below 20 oversold, over a 14-period default.
IntermediateVolume Oscillator
Percent difference between a fast and slow EMA of volume; above zero means short-term volume exceeds long-term average, signalling heightened activity.
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