On-Balance Volume (OBV)

On-balance volume is a cumulative indicator that adds a period's volume to a running total when price closes higher and subtracts it when price closes lower. The resulting line tracks whether volume is flowing into or out of an instrument, on the theory that volume tends to move ahead of price. Its creator, Joe Granville, presented OBV as a way to spot accumulation and distribution before they show up on the chart. Traders read the slope of the OBV line alongside price: a rising line confirming rising prices supports the trend, while a divergence — price making new highs as OBV flattens or falls — warns that the move lacks participation. In spot forex, where centralised volume does not exist, platforms compute OBV from tick volume, which counts price changes rather than traded units.