On-Balance Volume¶
Indicators · Volume
Cumulative signed-volume — rises on up-closes, falls on down-closes.
On-Balance Volume (OBV) is a running tally that adds the day's volume when price closes up and subtracts it when price closes down. The clever idea, from Joe Granville, is that volume flows into and out of a market before price moves — so the OBV line can lead price. When OBV is rising while price stalls, accumulation is happening under the surface; when OBV falls as price holds, distribution is. It turns raw volume into a smooth, trend-like line you can read at a glance.
How it works¶
It's pure cumulative signed volume: each bar, if the close is higher than the previous close, the full bar volume is added to the running total; if lower, it's subtracted; if unchanged, OBV holds. The result is a single line in a sub-pane. The absolute value is meaningless (it depends on where the cumulative sum started) — what matters entirely is the line's direction and divergence from price. There's nothing to tune: OBV has no period.
When to use it¶
OBV's headline use is divergence. Price making a new high while OBV makes a lower high warns the move isn't backed by volume and may fail; the reverse hints at quiet accumulation before a rally. It's also a clean trend-confirmation line — OBV rising with price confirms the trend has volume support. Treat it as a confirmation and early-warning tool, not a trigger, and remember on forex it's built from tick volume.
Example¶
Volume-backed trend confirmation: wire bars into OBV and require OBV to be rising (its own slope up) alongside your price entry through an And gate into a Buy Signal, so you only buy moves that volume is supporting. Watch for OBV/price divergence in the Tester review to understand failed trades.
Tips & gotchas¶
- Only direction matters. The absolute OBV number is arbitrary — read slope and divergence, never the level.
- Divergence is the edge — OBV disagreeing with price is its most valuable signal.
- No parameters — it's a clean cumulative line; smooth it with an SMA if you want a signal line.
- Tick volume on forex — directional, but not contract volume.
Related blocks¶
Inputs¶
| Socket | Type | What to wire in |
|---|---|---|
| Bars | bars |
Price bars |
Outputs¶
| Output | Type | Plots as | Description |
|---|---|---|---|
| OBV | series |
Line · sub-pane | OBV cumulative value |
Parameters¶
| Parameter | Type | Default | What it does |
|---|---|---|---|
| Line color | colour | #9ccc65 |
Reference auto-generated from the block catalog · category Indicators.