OBV Divergence Indicator [TradingFinder] On-Balance Vol Reversal🔵 Introduction
The On-Balance Volume (OBV) indicator, introduced by Joe Granville in 1963, is a powerful technical analysis tool used to measure buying and selling pressure based on trading volume and price.
By aggregating trading volume—adding it on positive days and subtracting it on negative days—OBV creates a cumulative line that reflects market volume pressure, making it valuable for confirming trends, identifying entry and exit points, and forecasting potential price movements.
Divergences between price and OBV often provide significant signals. A bearish divergence occurs when the price forms higher highs while the OBV line forms lower highs. This discrepancy indicates that upward momentum is weakening, increasing the likelihood of a downward trend.
In contrast, a bullish divergence happens when the price makes lower lows, but the OBV line forms higher lows. This suggests increasing buying pressure and the potential for an upward trend reversal.
For instance, if the price is rising but the OBV trendline is falling, it may signal a bearish divergence, warning of a possible price decline. Conversely, if the price is falling while the OBV line is rising, this could signal a bullish divergence, indicating a possible price recovery. These signals are particularly useful for identifying market turning points.
OBV often acts as a leading indicator, moving ahead of price changes. For example, a rising OBV alongside stable or declining prices can signal an impending upward breakout.
Conversely, a declining OBV with rising prices may indicate that the current uptrend is losing strength. Traders using this strategy often consider entering positions at breakout levels while setting stop losses near recent swing highs or lows to manage risk effectively.
This integration highlights how OBV divergences can provide actionable insights for predicting price movements and managing trades efficiently.
Bullish Divergence :
Bearish Divergence :
🔵 How to Use
The OBV indicator, as a cumulative tool, assists analysts in comparing volume and price changes to identify new trends and key levels for entering or exiting trades. Beyond confirming existing trends, it is particularly effective in analyzing positive and negative divergences between price and volume, providing valuable signals for trading decisions.
🟣 Bullish Divergence
A bullish divergence occurs when the price continues its downward or stable trend, but the OBV line starts rising, forming a higher low compared to its previous low. This suggests increasing volume on up days relative to down days and often signals a reversal to the upside.
For instance, if an asset's price stabilizes near a support level but the OBV line shows an upward trend, this divergence could present an opportunity to enter a long position.
🟣 Bearish Divergence
A bearish divergence occurs when the price forms higher highs, but the OBV line declines, creating lower highs compared to previous peaks. This indicates decreasing volume on up days relative to down days and often acts as a warning for a reversal to the downside.
For example, if an asset’s price approaches a resistance level while OBV starts declining, this divergence may signal the beginning of a downtrend and could indicate a good time to exit long trades or enter short positions.
🔵 Setting
Period : The "Period" setting allows you to define the number of bars or intervals for "Periodic" and "EMA" modes. A shorter period captures more short-term movements, while a longer period smooths out the fluctuations and provides a broader view of market trends.
You can enable or disable labels to highlight key levels or divergences and tables to show numerical details like values and divergence types. These options allow for a customized chart display.
🔵 Table
The following table breaks down the main features of the oscillator. It covers four critical categories: Exist, Consecutive, Divergence Quality, and Change Phase Indicator.
Exist : If divergence is detected, a "+" will appear in this row.
Consecutive: Shows the number of consecutive divergences that have formed in a short period.
Divergence Quality : Evaluates the quality of the divergence based on the number of occurrences. One is labeled "Normal," two are "Good," and three or more are considered "Strong."
Change Phase Indicator : If a phase change is detected between two oscillation peaks, this is marked in the table.
🔵 Conclusion
The OBV (On Balance Volume) indicator is a simple yet effective tool in technical analysis that combines volume and price changes to provide a comprehensive view of market buying and selling pressure. By identifying positive and negative divergences, OBV enables analysts to detect early signs of trend reversals and refine their trading strategies.
Divergences in OBV often precede price changes, making it a leading indicator for predicting market movements. Using OBV alongside other technical tools can enhance decision-making accuracy and help traders identify better entry and exit points. However, it is essential to consider the limitations of OBV, such as the potential for signal errors and the impact of sudden news events.
Ultimately, OBV serves as a complementary tool in technical analysis, aiding in trend identification, signal confirmation, and risk management. A thoughtful application of this indicator, in combination with other analytical tools, can create valuable opportunities for profiting in financial markets.
Obv-m
On Balance Volume CrossoversCheck on balance volume but with crossover. You can choose the smoothing method, which is set by default to use the Volume Weighted Moving Average (bringing volume to the equation is always a good idea) but you can change to SMA, MA, EMA, ...
Hope you guys enjoy it and don't forget to rate it up! :)
I plan to include % from 0-100 OBV in here later! Stay tuned.
Feedback is cool.
Volume RSIThis is an indicator that shows the inflow and outflow of volume into a financial instrument. Volume is likely one of the most underrated source of data in trading unfortunately so there seems to be a lack of studies on it. The size of the candle is related to the strength of the move. The calculations for this are: cumulative sum of +volume if open < close OR -volume if open > close. This has been now transformed into an rsi style indicator to give a distinct advantage (or atleast thats the idea). The idea is that we take rsi of candles so we might as well take the rsi of volume candles. As far as I can tell it is faster/its own thing compared to regular rsi. I ave also added a smoothing option. Dont forget you can change the settings and you wont die. Thank you for your interest in this release I hope you find great piles of money with it.
link to the script I used to make this
RSI+OBVthis strategy works on the basis of crossovers of RSI at different period and OBV at different periods (separately). I am using it for Nifty and Bank Nifty. Entry for long can be taken when green bar appears; and exit has to be done when it disappears. Entry for short has to be taken when red bar appears; and exit has to be done when it disappears.
With little help from price action good results can be achieved.
On Balance Volume Trend© 2022, CryptoNaut1000
An extension to "On Balance Volume Momentum (OBV Momentum)".
"OBV Trend" is a trend strength indicator, that can be used to identify strong trends and also trend changes based on volume.
High positive values indicate strong volume on the buy side, high negative values indicate strong volume on the sell side.
An increasing OBV trend indicates a strengthening buy trend or a weakening sell trend,
decreasing OBV trend indicates a strengthening sell trend or weakening buy trend.
OBV trend is calculated by plotting a short vs. a long moving average and filling the difference in volume.
OBV trend metric is absolute volume.
On Balance Volume MomentumA combination of "On Balance Volume (OBV)" and "Volume Oscillator".
"OBV Momentum" is a trend momentum indicator, that can be used to identify strong trends and also trend changes based on volume.
High positive values indicate strong volume on the buy side, high negative values indicate strong volume on the sell side.
An increasing OBV momentum indicates a strengthening buy trend or a weakening sell trend,
decreasing OBV Momentum indicates a strengthening sell trend or weakening buy trend.
OBV Momentum is calculated by comparing a short vs. a long moving average and plotting the difference in volume.
OBV Momentum metric is absolute volume.
McNamara Tally [CC]The McNamara's Tally was created by Nolan McNamara (Stocks and Commodities Feb 2022 pgs 44-45) and this aims to fix the issues with both the On Balance Volume and the Accumulation/Distribution Line by using a variation of Wilder's True Range to keep track of volume flow to better differentiate between bullish volume and bearish volume. I added a signal line to this indicator to provide clear buy and sell signals since the original didn't' have any so feel free to experiment and see if you come up with a better signal system. Buy when the indicator line turns green and sell when it turns red. I have included strong buy and sell signals in addition to normal ones so stronger signals are darker in color and normal signals are lighter in color.
Let me know if there are any other indicators or scripts you would like to see me publish!
OBV High / LOW (On-Balance Volume )This is a simple application of OBV indicator (On-Balance Volume ), to visually determine when a given stock current obv is near the highest or lowest based on the number of lookback bars.
Indicator examples:
### OBV value is near an all-time high ##
breakthrough , stock value could set new all-time highs.
rejection , stock value could come down or consolidate.
Example
Inputs
OBV High Lookback -> numbers of bars to look back for the obv high.
OBV LowLookback -> numbers of bars to look back for the obv low.
OBV EMA Length -> Ema length
Notes:
This script also comes with an ema indicator based on obv for smoothing the obv signal since it gets noise at lower timeframes (by default comes disabled)
OBV information
www.investopedia.com
Comments:
This is my first script any ideas, suggestions, or detected errors (language/script) don´t hesitate to send a message.
Best regards, Mauro.
Modified OBV w/ Divergence Detection by CryptorhythmsApirine OBV-M Modified OBV w/ MA Selection by Cryptorhythms
Intro
Released in the April 2020 issue of TASC, and created by Vitali Apirine.
Description
OBV-M is of course based on the classic indicator on balance volume originally developed by Joe Granville. Apirine then smooths the calculation and adds a signal line to help denote entry and exit points.
As the author points out uts also great at showing divergences!
Extras
As usual when porting indicators to the library here on tradingview, I like to add some extra flare!
💠MA selection to allow you to experiment with alternate settings
💠Bar coloration based on trade state for easy visual at a glance chart checking
💠Divergence Detection and plotting thanks for Ricardo Santos' script
Enjoy!
👍 We hope you enjoyed this indicator and find it useful! We post free crypto analysis, strategies and indicators regularly. This is our 78th script on Tradingview!
Divergence OBV RSI[mado]Divergence screener for OBV RSI
Regular Bullish: "D" navy label
Hidden Bullish: "H" navy label
Regular Bearish: "D" red label
Hidden Bearish: "H" red label
OBV Divergence +This study Plots Divergences for OBV along with 2 MA's
Choose between standard type of OBV and OBV Accumulation / Distribution thanks to spacetrader which seems to be a truer reading
Divergence Alerts are provided so that you dont have to stare at your screen all day
On Balance Volume Oscillator Strategy [QuantNomad]Looking for the way to use OBV Oscillator in a strategy.
Here is my first try. I just enter to position of a cross of 2 emas based on OBV.
Here is my original oscillator indicator:
