On-balance volume (OBV) is a technical analysis indicator intended to relate price and volume in the stock market. OBV is based on a cumulative total volume.[1]
Because OBV is a cumulative result, the value of OBV depends upon the starting point of the calculation.
Applicationedit
Total volume for each day is assigned a positive or negative value depending on prices being higher or lower that day. A higher close results in the volume for that day to get a positive value, while a lower close results in negative value.[2] So, when prices are going up, OBV should be going up too, and when prices make a new rally high, then OBV should too. If OBV fails to go past its previous rally high, then this is a negative divergence, suggesting a weak move.[3]
The technique, originally called "continuous volume" by Woods and Vignola, was later named "on-balance volume" by Joseph Granville who popularized the technique in his 1963 book Granville's New Key to Stock Market Profits.[1] The index can be applied to stocks individually based upon their daily up or down close, or to the market as a whole, using breadth of market data, i.e. the advance/decline ratio.[1]
OBV is generally used to confirm price moves.[4] The idea is that volume is higher on days where the price move is in the dominant direction, for example in a strong uptrend there is more volume on up days than down days.[5]
Tuned, Using The On-Balance Volume Indicator Programmatically
January 09, 2024
balance, volume, technical, analysis, indicator, intended, relate, price, volume, stock, market, based, cumulative, total, volume, contents, formula, application, similar, indicators, also, references, external, linksthe, formula, edito, displaystyle, prev, le. On balance volume OBV is a technical analysis indicator intended to relate price and volume in the stock market OBV is based on a cumulative total volume 1 Contents 1 The formula 2 Application 3 Similar indicators 4 See also 5 References 6 External linksThe formula editO B V O B V p r e v v o l u m e i f c l o s e gt c l o s e p r e v 0 i f c l o s e c l o s e p r e v v o l u m e i f c l o s e lt c l o s e p r e v displaystyle OBV OBV prev left begin matrix volume amp mathrm if close gt close prev 0 amp mathrm if close close prev volume amp mathrm if close lt close prev end matrix right nbsp Because OBV is a cumulative result the value of OBV depends upon the starting point of the calculation Application editTotal volume for each day is assigned a positive or negative value depending on prices being higher or lower that day A higher close results in the volume for that day to get a positive value while a lower close results in negative value 2 So when prices are going up OBV should be going up too and when prices make a new rally high then OBV should too If OBV fails to go past its previous rally high then this is a negative divergence suggesting a weak move 3 The technique originally called continuous volume by Woods and Vignola was later named on balance volume by Joseph Granville who popularized the technique in his 1963 book Granville s New Key to Stock Market Profits 1 The index can be applied to stocks individually based upon their daily up or down close or to the market as a whole using breadth of market data i e the advance decline ratio 1 OBV is generally used to confirm price moves 4 The idea is that volume is higher on days where the price move is in the dominant direction for example in a strong uptrend there is more volume on up days than down days 5 Similar indicators editOther price volume indicators Money flow Price and volume trend Accumulation distribution indexSee also editDimensional analysis explains why volume and price are multiplied not divided in such indicatorsReferences edit a b c Joseph E Granville Granville s New Strategy of Daily Stock Market Timing for Maximum Profit Prentice Hall Inc 1976 ISBN 0 13 363432 9 On Balance Volume OBV 22 September 2007 OBV Behavioral Limitations and Formulas at Financial edu com What Does On Balance Volume Mean StockCharts com article on On Balance VolumeExternal links editInvestopedia Definition On Balance Volume Indicator Tuned Using The On Balance Volume Indicator Programmatically Retrieved from https en wikipedia org w index php title On balance volume amp oldid 1085402274, wikipedia, wiki, book, books, library,
