What It Is
On-Balance Volume (OBV) is a cumulative volume indicator that adds volume on up days and subtracts it on down days. The theory: volume precedes price, and tracking cumulative volume flow reveals whether smart money is accumulating or distributing.
Developed by Joe Granville in the 1960s, OBV is based on a simple premise: volume drives price. If OBV is rising while price is flat or falling, institutions may be quietly accumulating. If OBV is falling while price is rising, they may be distributing.
The absolute number doesn't matter - what matters is the direction and shape of the OBV line relative to price. Look for divergences, breakouts, and trend confirmation.
Trading Strategies
Trading Strategies Divergence Trading Using OBV divergences to anticipate reversals...
Adding moving averages to OBV for trend signals...
Divergence trades, OBV trend following, and combining with price action.
OBV divergence is one of the most underrated signals in crypto. When price makes equal highs but OBV makes a lower high, distribution is happening quietly. Trust OBV over price in these situations.
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Compare this reference with related structures and readings before applying it to a live chart.