A cumulative volume indicator that exposes the demand flow hidden behind price. Divergence between price and OBV is what reveals quiet accumulation and quiet distribution.
OBV (On-Balance Volume) was introduced by Joseph Granville in 1963. Rather than tracking price, it tracks the direction of the volume that produced the price — accumulating it day after day into a single running total that shows whether buyers or sellers, over time, are gaining the upper hand.
The rule is plain: on days when price closes higher than the previous close, that day's full volume is added; on days when price closes lower, it is subtracted. The accumulated line then traces, in a way price alone cannot, the long shadow of the volume behind the moves.
Formula
Close > previous close → OBV = previous OBV + today's volume Close < previous close → OBV = previous OBV − today's volume Close = previous close → OBV = previous OBV
The starting value is arbitrary (zero, or simply the first day's volume). The absolute level carries no meaning; slope and divergence are what speak.
How to Read
NASDAQ:AAPL
When price is rising and OBV is rising with it, the rally is being carried by genuine volume. The crowd is not merely watching — it is participating, and the trend is sound.
The same holds for declines: an OBV that drops alongside price confirms that selling pressure is real.
The most prized signal from OBV is divergence with price.
The old maxim — "price doesn't lie, but volume lies even less" — is exactly what divergence is making visible.
During range-bound consolidation, price may move sideways while OBV quietly drifts in one direction. This is widely watched as a leading hint for the eventual breakout direction. Before the triangle finally resolves, OBV has often already written the answer.
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