On Balance Volume Trading Strategy

Volume shows crowd sentiment as price bars carve out patterns that predict a bullish or bearish outcome.

Volume supporting price action creates convergence, adding reliability to directional signals. Opposing action creates divergence, warning that market forces are in conflict, with one side eventually taking control.

OBV generates more actionable signals than the green or red volume histograms commonly found at the bottom of price charts.

  • OBV hits a new high while the price tests resistance: bullish divergence, predicting the price will break resistance and surge higher, playing catch-up.
  • The price hits a new high while OBV grinds at or below the last resistance level: bearish divergence, predicting the rally will stall or reverse.
  • OBV hits new low while price tests support: bearish divergence, predicting the price will break support and surge lower, playing catch up.
  • The price hits new low while OBV grinds at or above the last support level: bullish divergence, predicting the sell-off will stall or reverse.
  • OBV matches the price action, higher or lower: bullish or bearish convergence, depending on direction.
OBV gives the most reliable feedback around tests of major highs and lows, making it a perfect tool to measure the potential for breakouts and breakdowns.


- the rookie trader 



















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