On Balance Volume (OBV) is a technical trading momentum indicator that uses volume flow to predict changes in stock price. It was developed by Joseph Granville and introduced in his 1963 book Granville’s New Key to Stock Market Profits. OBV measures buying and selling pressure as a cumulative indicator, adding volume on up days and subtracting it on down days. It provides a running total of an asset’s trading volume and indicates whether this volume is flowing in or out of a given security or currency pair. The OBV is a cumulative total of volume (positive and negative). OBV is used to confirm price trends and warn of potential price reversals. It is used to identify divergences between OBV and price to predict price movements.
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