What is On-Balance Volume (OBV)?

What is On-Balance Volume (OBV): A chart indicator used in the technical analysis of financial markets. Its purpose is to track momentum using trading volume changes and flow as the primary factors.

Category: Technical analysis indicator

How is On-Balance Volume (OBV) Used: On-Balance Volume is meant to help predict a security’s price changes by tracking changes in trading volume. More specifically, OBV users believe that increases in volume will often precede major price changes, whether bullish or bearish. The OBV indicator is intended to track institutional investors, whose large money moves often generate significantly increased volume and interest in a stock or ETF. When this happens, OBV is meant to give a clue as to a potential impending price move.

What Does On-Balance Volume (OBV) Consist of: OBV consists of one line measuring cumulative changes in volume. The slope of the OBV line is typically of most interest to traders, as the slope denotes the strength or weakness of volume changes. The indicator is usually placed either above or below the price chart.

What Does On-Balance Volume (OBV) Look Like:

Chart of On-Balance Volume
Chart of On-Balance Volume – Source: TheTechnicals.com and TradingView

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