On-Balance Volume (OBV)
What is it?
What it measures:
Measures cumulative buying and selling pressure by adding volume on up days and subtracting volume on down days.
How to interpret it:
- OBV Breakout: OBV breaking out to new highs before price leads to upcoming price breakouts.
- Trend Confirmation: Rising OBV confirms a healthy bullish trend.
Used for:
- Confirming trend sustainability and spotting volume accumulation.
Limitations:
- A single massive volume spike on an earnings announcement can distort OBV trend lines.