volume
On-Balance Volume
On-Balance Volume adds volume on up-days and subtracts it on down-days, showing whether volume is flowing with or against price.
Default Params:ma_period=20
What It Measures
Volume flow: whether buyers or sellers are controlling trading activity.
The Math (Simplified)
Start at zero. On an up-day add that day's volume; on a down-day subtract it. The cumulative line's slope shows net buying vs selling pressure.
Default Inputs & Tuning
A 20-day moving average of OBV is the standard way to smooth it into a signal.
When It Works (Market Edge)
Confirming trends: a rising OBV alongside a rising price confirms institutional buying.
When It Fails
Divergence noise: OBV can diverge from price for months without a reversal actually arriving.
Common Myths
Myth: OBV divergence predicts reversals.
Truth: Divergences are common and often persist. They are a hint, not a timing signal.
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