GlossaryOn-Balance Volume (OBV)
On-Balance Volume (OBV)
On-Balance Volume adds the volume of every candle with a rising close and subtracts the volume of every candle with a falling close. The curve thus shows whether volume tends to come with rising or with falling prices. You mainly use it to confirm a price move or to spot a contradiction.
Calculation
The sum starts at zero on the chart's first candle and then runs on candle by candle: if a candle closes higher than the previous one, its volume is added; if it closes lower, it is subtracted. With the same close, the OBV stays where it is.
It always counts the candle's entire volume, whether the close is one percent or one hundredth higher. A candle without a volume figure counts as zero.
The curve is green as long as it stays the same or rises from the previous candle, and red when it falls.
How to read it
- Direction, not level: The OBV has no fixed scale. What counts is whether it rises or falls and whether it makes new highs or lows.
- Confirmation: If price and OBV rise together, the rise is carried by volume. The same applies on the way down.
- Divergence: If the price makes a new high but the OBV does not, less volume is coming with the rising candles. That is seen as a warning sign.
- Accumulation: If the OBV rises while the price moves sideways, more volume is flowing on the green candles than on the red ones. Many read this as positions being built before a breakout.
- Breakouts in the OBV: If the OBV breaks out of its own sideways phase before the price does, that can signal the price breakout ahead of time.
Apart from the style, the OBV has no settings.
Good to know
- The absolute value depends on where the chart's history begins. So compare only the path, highs and lows, never the level itself.
- No volume, no OBV. For series without volume, such as some indices, the pane stays empty.
- The rule is crude: a candle with huge volume and a tiny price change moves the OBV just as much as one with a large move.
- Depending on the market, volume is counted in coins, contracts or shares. Values of different symbols are not comparable.