4 min Read Dec 1, 2022
On-Balance Volume (OBV) is a cumulative volume indicator developed by Joseph Granville that tracks the running total of volume based on price direction — adding the session's volume when the price closes higher than the previous close, and subtracting it when the price closes lower. The theory is that volume precedes price: a rising OBV during a flat or declining price phase indicates that institutional buying (accumulation) is occurring beneath the surface, potentially foreshadowing a price breakout upward. Conversely, falling OBV during a price rally (bearish divergence) suggests distribution and warns of a potential reversal. OBV is one of the oldest and most widely used volume indicators in technical analysis, applied across Indian equity, index, and commodity charts to confirm price trends and identify divergences.
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