On Balance Volume Trading Signals
Buy when the obvdi rises above its signal line and sell when it falls below the signal line.
On balance volume trading signals. On balance volume obv is a momentum indicator developed by joe granville in the 1960s. On balance volume obv is a cumulative indicator for measuring volume flow. We ll then translate this to on balance volume changes.
Joseph granville first developed the obv metric in the 1963 book granville s new key to stock market profits. In the conventional form the on balance volume indicator began to be used in 1963 after publication of joseph e. Holt stocks commodities v.
This converts the classic obv indicator into bollinger bands and calculates the percentage of where the value lies within the bollinger bands. Let s take a hypothetical daily set of share price and share volume numbers. Granville s book new key to stock market profits.
It s a mass belief that volume drives price due to aggressive trades from institutional investors. Simply it s showing you buying or selling pressure. Since price typically follows volume traders look for certain trends in the obv indicator to be a.
Use it as an entry filter whenever a security is testing a major support or. Volume 10 000 shares. Example calculation of on balance volume.
Similarly if volume increases without an attendant rise in the security an upward move is expected to follow. On balance volume obv is a very popular momentum indicator that tracks absolute change in volume to speculate price movement. The on balance volume disparity indicator was created by phillip c.
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