— HOW IT WORKS
What OBV does, and when it works.
On-Balance Volume adds the day's volume on up bars and subtracts it on down bars, producing a single running line. The line's absolute value is meaningless; its direction and divergence from price are the signal.
Its best use is confirmation: a breakout with OBV making new highs alongside price is backed by real participation, while price pushing higher as OBV stalls or rolls over flags a move running on fumes. That divergence read is OBV's whole edge.
OBV treats a 0.1% up day and a 5% up day identically — it only looks at direction, not magnitude — so it can mislead on choppy, low-conviction tape. Use it for confirmation and divergence, not as a standalone trigger.
— BEST FOR
Where it earns its slot.
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