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Track the smart money - cumulative volume flow reveals accumulation and distribution before price moves
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.
Key Signals 📈 Bullish Divergence Price ↓ OBV ↑ Price makes lower lows but OBV makes higher lows. Smart money is accumulating despite falling prices. Potential reversal up.
Price ↑ OBV ↓ Price makes higher highs but OBV makes lower highs. Smart money is distributing despite rising prices. Potential reversal down.
Price and OBV both making higher highs. Volume confirms the uptrend. This is healthy price action.
OBV breaks above resistance before price does. This often leads price - a bullish signal that volume supports higher prices.
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.
Indicators confirm what price action shows. They don't replace it. Never trade based on an indicator signal alone. Always combine with chart structure, pattern recognition, and volume analysis.
The Academy teaches when to use this indicator, when to ignore it, and how to combine it for high-probability setups.
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