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ON BALANCE VOLUME (OBV)
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OBV was one of the most popular indicators to measure volume flow. The concept behind this indicator is "volume precedes price". OBV is a simple indicator that adds a period's volume when the close is up and subtracts the period's volume when the close is down. OBV Line is then formed by a cumulative total of the volume additions and subtractions. This line can then be compared with the price chart of the underlying security to look for divergences or confirmation of the price direction. In other words, when there appears a downward price pattern accompanied by an increasing OBV, then it may indicate that the security has found a support and rise in the near future. On the contrary, if there is an upward price pattern followed by a decreasing OBV, then it may imply that the security price may become fragile and turn down in a short time.
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