On-Balance Volume is a cumulative volume indicator that adds volume on up days and subtracts it on down days, creating a running total that reveals whether volume is flowing into or out of an asset. Developed by Joe Granville, OBV often leads price — a rising OBV during a consolidation suggests accumulation, while a falling OBV during a hold signals distribution. The direction of OBV matters more than its absolute value.
Cumulative calculation: volume added on up closes, subtracted on down closes. OBV trend reveals underlying buying or selling pressure. Divergences between OBV and price signal potential reversals. OBV breakouts from trendlines can precede price breakouts. Rising OBV during consolidation indicates accumulation; falling OBV indicates distribution.
Enter long when OBV breaks above its own trendline resistance while price is still consolidating. Buy when OBV makes a higher high while price makes an equal or lower high (bullish divergence). Look for OBV to confirm a price breakout — a breakout on rising OBV is more reliable. Enter when OBV shows steady accumulation during a price pullback in an uptrend.
Exit longs when OBV diverges bearishly — making lower highs while price makes higher highs. Close positions when OBV breaks below its own support trendline. Take profits if OBV flattens after a strong advance, suggesting buying pressure is fading. Watch for OBV to confirm exits — if price drops but OBV holds steady, the pullback may be temporary.
1H, 4H, Daily
OBV is most powerful as a leading indicator — watch for OBV to break out of a range before price does, as this often signals an impending move. Do not fixate on the absolute OBV value; focus entirely on its direction and divergences from price. Pair OBV with price action analysis for confirmation rather than using it in isolation.
Volume Weighted Average Price (VWAP) represents the average price an asset has traded at throughout the session, weighted by volume. It serves as a dynamic intraday fair-value benchmark used by institutional traders to gauge execution quality. For retail traders, VWAP acts as a powerful support/resistance level and trend filter — price above VWAP suggests bullish intraday bias, while price below suggests bearish bias.
The Klinger Volume Oscillator (KVO) measures the long-term trend of money flow by comparing volume to price movement direction. It calculates a volume force based on the relationship between the high-low range, close, and volume, then applies two exponential moving averages to create an oscillator. The KVO is particularly useful for identifying divergences between volume flow and price, signalling potential reversals before they occur.
Volume Spread Analysis examines the relationship between price spread (the range of a candle), closing position within that spread, and the accompanying volume to determine the intentions of institutional market participants. Developed from the work of Richard Wyckoff and refined by Tom Williams, VSA identifies accumulation, distribution, and supply/demand imbalances by reading the story that volume and price action tell together.
The Money Flow Index is a volume-weighted RSI that measures buying and selling pressure by incorporating both price and volume data. It oscillates between 0 and 100, with readings above 80 considered overbought and below 20 considered oversold. Because it includes volume, MFI often provides earlier reversal signals than standard RSI, making it particularly effective for identifying exhaustion moves.