On-Balance Volume

On-Balance Volume (OBV) is a technical analysis indicator that measures buying and selling pressure by adding the volume on up days and subtracting the volume on down days. The idea behind OBV is that price movements are accompanied by volume, and when volume is higher on up days than on down days, it suggests that there is more buying pressure than selling pressure. Conversely, when volume is higher on down days than on up days, it suggests that there is more selling pressure than buying pressure.

OBV is plotted as a line that fluctuates above and below a zero line, with the direction of the line indicating the overall trend. When the line is rising, it suggests that buying pressure is increasing and the price may continue to rise. When the line is falling, it suggests that selling pressure is increasing and the price may continue to fall.

Traders often use OBV in conjunction with other technical indicators and chart patterns to make trading decisions. However, like all technical indicators, OBV has limitations and should not be used in isolation to make trading decisions.