The On-Balance Volume (OBV) is a technical analysis indicator that quantifies the flow of volume in and out of a security over a specific period. Developed by Joseph Granville in the 1960s, OBV aims to provide insights into the relationship between price movements and trading volume. Unlike traditional volume indicators, OBV incorporates both the price change and volume direction, offering a more comprehensive view of market activity.

The OBV calculation is relatively straightforward. On days when the closing price is higher than the previous day, the day's volume is added to the cumulative OBV. Conversely, if the closing price is lower, the day's volume is subtracted. The resulting line graph visually represents the cumulative buying and selling pressure.

Traders use OBV to confirm trends and identify potential reversals. A rising OBV confirms an uptrend, indicating strong buying pressure, while a falling OBV suggests increasing selling pressure and a potential downtrend. Divergences between price movements and OBV can signal trend reversals, providing traders with valuable insights for making informed decisions in dynamic financial markets. Overall, On-Balance Volume serves as a useful tool for technical analysts seeking to understand the strength and sustainability of price trends.

On-Balance Volume (OBV) is a technical analysis indicator that measures buying and selling pressure using volume flow. It was developed by Joseph Granville in the 1960s and is still widely used by traders today. The concept is straightforward: when the price of an asset closes higher, that day’s trading volume is added to the OBV total. When the price closes lower, the day’s volume is subtracted. The cumulative result forms a line that helps traders identify whether volume is confirming a price trend. If OBV rises with price, it suggests strong buying interest, while divergence between OBV and price can signal a possible reversal. OBV is often used with other indicators to strengthen trading decisions.