OBV: Is volume backing the move?
How On-Balance Volume tracks buying and selling pressure, and how an OBV divergence can warn that a rally is weak.
OBV follows the money behind a move
On-balance volume (OBV) keeps a running total: add the day’s volume when price closes up, subtract it when price closes down. It shows whether volume is flowing into or out of a stock.
What to look for
- OBV rising with price: the move has real buying behind it.
- The number itself doesn’t matter. Its direction does.
- Watch for divergence: price makes a new high, but OBV doesn’t.
Volume is conviction. A move on heavy volume means big players are involved; a move on thin volume can fade.
Price reached a new high near ₹907, but OBV is well below its earlier peak. What does that suggest?
- Big buyers are piling in
- Fewer buyers are behind this new high
- OBV is broken
Show the answer
Fewer buyers are behind this new high. OBV didn’t follow price up. The second rally came on much less volume than the first, so fewer buyers were behind it.
A new high without volume
The first rally came on heavy volume and so did the selling after it. The second climb to a new high came on thin volume, so OBV stayed well below its peak. A new high that volume doesn’t confirm often fails.
Price can be pushed around on low volume. Before trusting a breakout, check that volume and OBV agree.
Practise OBV, free
Reading about it is step one. In MarketSeekho you see a real NSE chart with the future hidden, call Bull or Bhalu, say why, and get graded on your reasoning, not luck.
Common questions
What is OBV?
On-balance volume (OBV) keeps a running total: add the day’s volume when price closes up, subtract it when price closes down. It shows whether volume is flowing into or out of a stock.
What should I look for with OBV?
OBV rising with price: the move has real buying behind it. The number itself doesn’t matter. Its direction does. Watch for divergence: price makes a new high, but OBV doesn’t.
How can I practise reading OBV for free?
MarketSeekho has a free four-page chapter on OBV (learn, answer a question, spot it on a chart, then make a call) and an unlimited OBV practice game graded on your reasoning. No sign-up or money needed.