Indicators · Intermediate

On-Balance Volume Basics

A 1-minute lesson from the MarketPro academy, one of 22 in trading indicators.

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Short answer

On-balance volume (OBV) is a running cumulative total that adds a period's volume when price closes higher and subtracts it when price closes lower, producing a single line meant to reflect whether volume is flowing into or out of a market. The absolute level of OBV is not meaningful on its own — what matters is its direction and how it compares to price.

On-balance volume (OBV) is a running cumulative total that adds a period's volume when price closes higher and subtracts it when price closes lower, producing a single line meant to reflect whether volume is flowing into or out of a market.

Reading OBV

The absolute level of OBV is not meaningful on its own — what matters is its direction and how it compares to price. A rising OBV alongside rising price is read as confirmation that volume supports the move. When price and OBV move in opposite directions, that divergence is often treated as an early warning that the current trend may be losing underlying support.

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Lesson 14 of 22 in Trading indicators

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