65-Day Academy · Day 26 · Technical Analysis
OBV & Volume Confirmation Tools
On-Balance Volume
OBV adds the day's volume when price closes up, subtracts when down — a running tally of net pressure. Its signal is DIVERGENCE: price making new highs while OBV stalls = the rally is carried by fewer, bigger prints (distribution); price flat while OBV rises = quiet accumulation. Joe Granville's insight: volume leads because institutions must build positions over time.
The honest limits
OBV treats every up-day's volume as equal — a +0.1% day adds the same as a +5% day. It is a coarse tool: use it for the ACCUMULATION/DISTRIBUTION question over weeks, not for day-to-day signals. Modern variants (A/D line with close location weighting) refine it; the divergence logic is the value.
What you'll practise
True or false: price making new highs while OBV flatlines suggests the rally is being distributed.
10 XP in the app · introductory
Sources
- On-Balance Volume (OBV)Investopedia
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All lessons are for educational purposes only and are not individualized financial advice, a recommendation, or a solicitation to buy or sell any security. Options involve substantial risk and are not suitable for every investor.