On-Balance Volume (OBV)
Cumulative volume indicator that adds volume on up days and subtracts it on down days to reveal whether volume is confirming a price trend.
OBV_t = OBV_{t-1} + Volume_t (if Close_t > Close_{t-1});
OBV_t = OBV_{t-1} − Volume_t (if Close_t < Close_{t-1});
OBV_t = OBV_{t-1} (if Close_t = Close_{t-1})On-Balance Volume keeps a running total: when price closes higher than the previous bar, the full bar's volume is added; when it closes lower, it is subtracted. The absolute OBV level is meaningless — only its direction and divergence with price matter.
When OBV makes new highs alongside price, the uptrend is confirmed. When price makes a new high but OBV doesn't, bearish divergence warns that buying pressure is waning. OBV was developed by Joseph Granville and remains one of the most widely used volume-based indicators.