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OBV

Type: obv • Category: indicators

Description​

On Balance Volume

Parameters​

NameTypeDescriptionRequiredDefault
dataExpstringdata with pricesno
pricestringselect the column with closing pricesno
volumestringselect the column with volumeno

Help​

OBV (On Balance Volume)

Description​

The On Balance Volume (OBV) indicator is a momentum indicator used in financial analysis that relates volume to price change. It was developed by Joe Granville in the 1960s. The OBV indicator adds the entire volume to a running total when the security's price increases, and subtracts the entire volume from the running total when the security's price decreases.

What does this worker do?​

The OBV worker calculates the On Balance Volume indicator for a given dataset. It takes two main parameters:

  • dataExp: The dataset containing prices and volumes.
  • price: The column name in dataExp that contains the closing prices.
  • volume: The column name in dataExp that contains the trading volumes.

How to interpret the results​

The OBV indicator can be interpreted in several ways:

  • Trend confirmation: A rising OBV line confirms an uptrend in the price, while a falling OBV line confirms a downtrend.
  • Divergences: A divergence between the OBV line and the price chart can indicate a potential reversal. For example, if the price is making new highs but the OBV line is failing to make new highs, it may indicate a weakening uptrend.
  • Breakouts: A breakout above or below a previous high or low in the OBV line can indicate a strong buying or selling pressure.

Usage​

To use the OBV worker, simply provide the required parameters:

worker = OBV(dataExp, price='close', volume='volume')

Visualizing the OBV Indicator​

For a better understanding of how to use the OBV indicator, refer to the following GIFs:

Full GIF​

[![OBV Indicator Full GIF](https://pub-6c7cc7f707d94ca98153d59a039b9a3d.r2.dev/indicator_full.gif)](https://pub-6c7cc7f707d94ca98153d59a039b9a3d.r2.dev/indicator_full.gif)

Short GIF​

[![OBV Indicator Short GIF](https://pub-6c7cc7f707d94ca98153d59a039b9a3d.r2.dev/indicator_short.gif)](https://pub-6c7cc7f707d94ca98153d59a039b9a3d.r2.dev/indicator_short.gif)

Additional Knowledge​

The OBV indicator is based on the idea that volume precedes price movement. When buying pressure (volume) increases, it can lead to an increase in price. Conversely, when selling pressure (volume) increases, it can lead to a decrease in price. By analyzing the OBV line, traders and analysts can gain insights into the underlying buying and selling pressure in the market.