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| On Balance Volume (OBV) was developed by Joe Granville and originally presented in his book New Strategy of Daily Stock Market Timing for Maximum Profits. On Balance Volume is a running total of volume. It shows if the volume is flowing into or out of a security. When the security closes higher than the previous close, all of the day's volume is considered up-volume. When the security closes lower than the previous close, all of the day's volume is considered down-volume. The basic assumption, regarding OBV analysis, is that OBV changes precede price changes. The theory is that smart money can be seen flowing into the security by a rising OBV. When the public then moves into the security, both the security and the OBV will surge ahead. |
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 On Balance Volume (OBV) - Technical Analysis from A to Z
On Balance Volume ("OBV") is a momentum indicator that relates volume to price change.
On Balance Volume is a running total of volume. It shows if the volume is flowing into or out of a security.
When the security closes higher than the previous close, all of the day's volume is considered up-volume.
When the security closes lower than the previous close, all of the day's volume is considered down-volume.
Volume - Technical Analysis from A to Z
Volume is simply the number of shares (or contracts) traded during a specified time frame
(e.g., hour, day, week, month, etc.). The analysis of volume is a basic yet very important element of technical analysis.
The volume provides clues as to the intensity of a given price move.
Volume can help determine the health of an existing trend. A healthy up-trend should have higher volume on the
upward legs of the trend, and lower volume on the downward (corrective) legs. A healthy downtrend usually has
a higher volume on the downward legs of the trend and lower volume on the upward (corrective) legs.
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