What is On Balance Volume? Forex Trading Indicators

What is On Balance Volume(OBV)?

      On Balance Volume Technical Indicator is one of the technical indicators which connect volume to price change. The currency value closes higher than the previous day’s close then  all of the day’s volume is considered up-volume that the same it closes lower than the previous day’s close then  all of the day’s volume is measured down-volume.

      On Balance Volume is in a down trend when each successive high is lower than the previous high and each successive low is lower than the previous low. The OBV is in sideways then is not creating profitable highs and lows and it is a doubtful trend.

OBV Calculation:

Today’s close is higher than yesterday’s close: OBV(i) = OBV(i-1)+VOLUME(i)
Today’s close is lower than yesterday’s close: OBV(i) = OBV(i-1)-VOLUME(i)
Today’s close is equal to yesterday’s close: OBV(i) = OBV(i-1)

OBV(i) - Current period’s indicator value.
OBV(i-1) - previous period’s indicator value.
VOLUME(i) —Current bar volume.