OBV Trading Strategies: On-Balance Volume Analysis
OBV tracks cumulative volume flow, showing whether money is moving into or out of an asset. Learn to spot divergences and predict price moves before they happen.
- OBV adds volume on up days, subtracts on down days. Rising OBV = accumulation. Falling = distribution.
- OBV divergence (OBV vs price disagreement) often precedes reversals. OBV leads price.
- Thrive displays OBV with automatic divergence detection and breakout alerts.
Explore OBV Signals
Click through OBV signal types:
Price making new lows but OBV is rising. Volume is bullish despite falling price. Smart money accumulating. Reversal likely coming.
OBV Signal
Price lower lows, OBV higher lows
OBV divergence warns of reversal. Wait for price confirmation (higher low or structure break). Enter long with stop below recent low. OBV leads price.
What Is OBV?
On-Balance Volume tracks cumulative volume flow. On up days, volume is added. On down days, it's subtracted. The result is a running total showing whether volume is flowing in (accumulation) or out (distribution).
The key insight: volume often moves before price. OBV can break out before price does, giving you early warning of the direction.
OBV Signals
Divergence
Bullish: Price lower lows, OBV higher lows. Volume accumulating despite falling price. Bearish: Price higher highs, OBV lower highs. Volume distributing despite rising price.
Confirmation
OBV rising with price = healthy trend. Volume confirming price move. No need to exit. OBV flat with rising price = suspect rally.
Breakout
OBV breaking to new highs before price = expect upside breakout. OBV breaking to new lows = expect downside. Volume leads.
| Signal | OBV | Price | Meaning |
|---|---|---|---|
| Bullish Div | Higher lows | Lower lows | Accumulation |
| Bearish Div | Lower highs | Higher highs | Distribution |
| Confirmation | Rising | Rising | Healthy trend |
| Breakout | New high/low | Consolidating | Breakout coming |
Trading with OBV
Trend Confirmation
Use OBV to confirm trends are real. OBV rising with price = stay in trade. OBV diverging = get cautious, trend may be ending.
Anticipating Breakouts
In consolidation, watch OBV direction. Rising OBV = accumulation, expect upside break. Falling = distribution, expect downside.
Common Mistakes
- OBV absolute value: The number doesn't matter—only direction and divergence.
- Short timeframes: OBV noisy on low TFs. Use 4H+ for clarity.
- Ignoring price action: OBV confirms price action, doesn't replace it.
- Bad volume data: OBV needs accurate volume. Use reliable exchange data.
Frequently Asked Questions
What is OBV (On-Balance Volume)?
Cumulative indicator that adds volume on up days and subtracts on down days. Shows whether volume is flowing into or out of an asset. Created by Joe Granville.
How is OBV calculated?
If close > previous close: OBV = previous OBV + volume. If close < previous: OBV = previous OBV - volume. If equal: no change. Running total of directed volume.
What is OBV divergence?
When OBV moves opposite to price. Bullish divergence: price lower lows, OBV higher lows (accumulation). Bearish: price higher highs, OBV lower highs (distribution).
Does OBV predict price?
OBV often leads price. Rising OBV during consolidation suggests breakout up. Falling OBV suggests breakdown. Volume precedes price movement.
How do I use OBV for confirmation?
OBV rising with price = healthy trend, volume confirms. OBV flat or falling with rising price = weak rally, no volume support. Use for trend validation.
What is an OBV breakout?
When OBV breaks to new highs/lows before price. Signals that volume is already moving—price will likely follow. Early warning of direction.
Does OBV work for crypto?
Yes. Crypto has transparent volume data. OBV tracks accumulation/distribution well. Higher timeframes (4H+) give cleaner signals.
OBV vs A/D line—what's the difference?
OBV uses entire volume based on close direction. A/D weighs volume by close position in range. OBV is simpler; A/D is more nuanced. Both useful.