Description:
The On Balance Volume (OBV) is a technical analysis indicator that measures the volume of a security and uses this information to predict future price movements. The main premise behind OBV is that volume precedes price, and changes in volume can be a strong indication of future price movements. This indicator measures buying and selling pressure by cumulatively adding volume on up days and subtracting volume on down days. It helps predict price movements by indicating whether a trend is supported by strong volume, with rising OBV suggesting buying pressure and falling OBV indicating selling pressure.
Input Parameters:
n/a
Use Cases:
- Overall Trend: When the OBV line is rising, it suggests that buying pressure is increasing, and the price may follow an upward trend. Conversely, a falling OBV line indicates that selling pressure is increasing, which could lead to a downward price trend.
- Trend Reversals: When the OBV line diverges from the price trend, it could signal a possible trend reversal. For example, if the price is increasing, but the OBV line is declining, it might indicate that buying pressure is weakening, and the upward trend may soon reverse.
- Confirm Breakouts: A breakout occurs when the price moves outside a predefined support or resistance level. The OBV can be used to confirm these breakouts by ensuring that the volume supports the price movement.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our Learning Center Article.
Jun 10, 2024