On-Balance Volume (OBV)
A cumulative volume-based indicator that adds volume on up days and subtracts volume on down days, used to confirm price trends and detect divergences.
Explained Simply
On-Balance Volume (OBV) was created by Joe Granville and is one of the oldest volume indicators. The calculation is simple: if today's close is higher than yesterday's, add today's volume to the running OBV total; if lower, subtract it. The absolute OBV number doesn't matter — what matters is the trend and divergences. When price makes new highs but OBV doesn't (bearish divergence), it suggests the rally lacks volume conviction and may reverse. When OBV makes new highs before price does (bullish divergence), it suggests accumulation is happening under the surface. OBV is particularly useful for confirming breakouts — a breakout accompanied by rising OBV is more likely to sustain than one without volume support.
How Tradewink Uses On-Balance Volume (OBV)
Tradewink's TechnicalAnalyzer computes OBV as part of its volume analysis suite. The system uses OBV divergences to filter breakout signals — a breakout that lacks OBV confirmation receives a lower conviction score. The AI also monitors OBV trends on watchlist stocks to detect early accumulation or distribution patterns before they become visible in price action alone.
Related Terms
Learn More
Momentum Trading Strategy: Ride the Trend with AI
Momentum trading is the most proven edge in stock markets. Learn how to identify momentum stocks, time entries, manage risk, and use AI to automate the process.
VWAP Trading Strategy: How Institutions Use Volume-Weighted Average Price
Learn how to trade using VWAP (Volume Weighted Average Price). Understand VWAP bounces, breakouts, and how institutional traders use VWAP as support and resistance.
Candlestick Patterns: 12 Essential Patterns Every Trader Should Know
Learn how to read candlestick charts and master the 12 most important candlestick patterns. Understand doji, hammer, engulfing, morning star, and more with practical trading examples.
See On-Balance Volume (OBV) in action
Tradewink uses on-balance volume (obv) as part of its AI trading signal pipeline. Start getting signals that use this concept to find real opportunities.