Understanding Indicators

OBV (On-Balance Volume)

Following the Smart Money

OBV tracks cumulative buying and selling pressure. It adds volume on up days and subtracts on down days, helping identify accumulation and distribution.

OBV Signals

Rising OBV + Rising Price: Confirms uptrend
Falling OBV + Falling Price: Confirms downtrend
Rising OBV + Flat Price: Accumulation - breakout coming
Falling OBV + Flat Price: Distribution - breakdown coming

OBV divergences are powerful signals. If price makes a new high but OBV doesn't, smart money may be selling into strength.

Key Takeaways

  • OBV = cumulative volume flow indicator
  • Confirms trends when moving with price
  • Divergences signal potential reversals
  • Rising OBV + flat price = accumulation