On-Balance Volume: Connecting Price Movement With Volume

On-Balance Volume, or OBV, is a cumulative indicator that adds volume on sessions when price closes higher and subtracts volume when it closes lower.

Some traders use it to compare volume trends with price trends.

For example, if price makes a new high while OBV fails to confirm it, they may investigate a possible divergence.

But OBV doesn't reveal the intentions of institutions, and divergence doesn't guarantee a reversal.

I use it as a secondary measure and verify any trade idea with price behavior and risk controls.