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OBV (On Balance Volume)

Granville's OBV adds volume on up days and subtracts it on down days: a line whose slope reveals which way volume is flowing. Its divergence with price is the footprint of accumulation or distribution.

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The OBV, presented by Joe Granville in 1963 under the slogan "volume precedes price", is the forefather of volume indicators. The idea: price can move on inertia or noise, but volume reveals where money is committing itself. If up days systematically carry more volume than down days, someone is genuinely buying — even if price, for now, is not showing it.

In plain terms — Two sets of fans at a stadium: the score (price) can stay level for a long time, but if one stand keeps filling match after match while the other empties, you know which way the weight is shifting. The OBV counts the people in the stands, not the goals.

How it is calculated

One rule, accumulated over time:

Today's close Operation
Above yesterday's OBV += the day's volume
Below yesterday's OBV −= the day's volume
Equal OBV unchanged

The whole day's volume is assigned to a single sign — a blunt approximation (the CVD refines it with aggressor data), but that very simplicity is what made it durable: it works wherever daily price and volume exist.

The absolute number means nothing: it depends on where the series starts. What you read are the slope and the comparisons with price.

How to read the chart — Top: near-flat price with volume bars coloured by sign. Bottom: the OBV rising while price stays flat — up days outweigh down days. Interactive — the highlighted points show the accumulation divergence, the breakout that follows, and the calculation rule.

INDICATOR · VOLUME OBV — volume with a sign Cumulative sum: +volume on up days, −volume on down days CYCLEPEDIA DIAGRAM — EMICICLO FLAT PRICE + VOLUME Price OBV — ON BALANCE VOLUME OBV rises VOLUME ON UP DAYS (RANGE) 87% PRICE OVER THE SAME STRETCH +1.9% Read the slope and the divergences with price, not the number
Flat price, rising OBV: the classic accumulation footprint. The breakout comes later — volume flagged it in advance.
Hover or tap the highlighted points

Reading it in practice

  1. Trend confirmation — price and OBV rising together: the move has participation. A rally with a flat OBV is a rally missing its fuel.
  2. Accumulation/distribution divergences — the reading Granville is remembered for: sideways or falling price with a rising OBV = someone is buying without moving price (silent absorption); the mirror image flags distribution. These are the tool's most valuable warnings, with the usual unguaranteed timing.
  3. OBV breakouts — the OBV clearing its own highs before price does is an early confirmation of the breakout being prepared.

Limits and traps

Warning — A single tick's difference in the close assigns the whole day's volume, for better or worse: bar-by-bar OBV is noise. It makes sense over wide windows, where attribution errors cancel out and the flow's tendency remains.

  • In low-liquidity markets a single anomalous block can bend the line for weeks.
  • OBV levels cannot be compared across instruments or eras: slope and divergences only.
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