What it is
Joseph Granville introduced OBV in 1963 with the idea that volume moves before price. If more volume trades on up candles than on down candles, buyers are stepping in, even if price has not moved much yet.
OBV has no settings to tune. Its absolute number means little, because it depends on where the history starts; what matters is its direction, its own trendlines and breakouts, and whether it agrees with price. On forex and CFD charts it uses tick volume.
How it is calculated
Start at zero. For each candle: if the close is higher than the previous close, add this candle's volume; if lower, subtract it; if unchanged, leave the total as it is.
How to read it
How to trade it
- 1
On a 1 hour gold chart, find a range where price is flat but OBV is climbing.
- 2
Entry trigger: price closes above the range high while OBV is at or near a new high. Enter on that close.
- 3
Stop below the middle of the range or the breakout candle's low, often 10 to 20 points on gold 1 hour.
- 4
Target the range height added to the breakout level. Exit early if OBV turns down sharply while price stalls.
A close back inside the range, or OBV breaking below its own recent swing low while price stalls, cancels the breakout idea.
On WickSpeak, OBV writes a plain-English reading on the live candle: whether volume is backing price, whether there is a divergence, how to trade it and what would prove it wrong. In Playbook you can test: crosses above or below its own average, is above or below its own average, is rising, or is falling.
Best markets and timeframes
Most useful on 15 minute to daily charts of index futures, crypto and gold, where volume moves are clear. On very fast charts the running total swings too much to read.
Common mistakes
- Reading the OBV number itself; only its shape and direction matter.
- Trading an OBV divergence with no price break.
- Forgetting that a whole candle's volume counts one way even if the close was barely changed.
Works well with
Questions traders ask
What does OBV tell you?
It shows whether volume is flowing in on up candles or out on down candles. Rising OBV means up candles are carrying more volume than down candles.
What is OBV divergence?
Price and OBV disagree, such as price making a new high while OBV does not. It suggests the move has less volume behind it, but needs a price trigger before acting.
Is OBV a leading indicator?
Granville argued volume moves before price, and OBV can turn before price in some cases. In practice it is best used as confirmation alongside a price signal.
Does OBV work on forex?
It works with tick volume, which tracks activity reasonably well. Treat it as a guide to activity rather than exact traded size.