| On Balance Volume (OBV) uses volume to confirm | | | | bearish. |
| price movements. The calculation for On Balance | | | | When prices move higher or lower on low volume, |
| Volume is given below | | | | the On Balance Volume technical analysis indicator will |
| - On days when the close is greater than the open | | | | hardly move. This can signal weak participation by |
| (i.e. stock posted a gain) then the volume for that | | | | traders and is called a divergence. The price |
| day is added to the running OBV total. | | | | movement was not confirmed by volume and |
| - However, when the close is less than the open (i.e. | | | | therefore is looked upon by traders as a questionable |
| stock posted a loss), then the volume for that day is | | | | move in which they are unlikely to join in. |
| subtracted from the running OBV total. Generally | | | | Volume is one of the most important parts of |
| speaking, increases in volume when prices rise is | | | | technical analysis, arguably second only to price. To |
| bullish. Therefore an increasing OBV is bullish. When | | | | learn how to interpret volume click the Volume |
| volume increases and prices decrease this is bearish: | | | | Analysis link. |
| A decreasing OBV is generally considered bearish. As | | | | Trading is risky. Trade only with money you can |
| a confirmation tool, if price and the OBV indicator are | | | | afford to lose. Past performance of technical analysis |
| rising together, this is bullish. When prices and the | | | | indicators is not indicative of future performance. |
| OBV are moving downward, this is considered | | | | |