look at the example of a short trade below. Source: Nenad Kerkez T (personal if the trend is up and the OBV is showing a bearish divergence, traders usually take a short position when the price breaks below its current trendline. The strategy is traded on H1 timeframe. As a result, the OBV users could then observe such events more easily by noting any crossovers of the OBV line and its moving average. OBV divergence always works best when the price is at resistance (for short trades) or at support (for long trades). In the example below, we see a market in an uptrend as identified by the 50-period simple moving average. Day 5: OBV 6,000 9,000 -3,000. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
The theory is that smart money can be seen flowing into the security by a rising OBV. Contact us, about us, guest blogging, terms of Service. Similarly, when price is moving but volume is low, traders may take this as an indication that the market may be ready to consolidate. A long entry is made when the lower BB is broken and the price returns back into the. The On Balance Volume indicator is regarded by the industry as one of the most popular momentum indicators and is best used to detect any new trade opportunities in the following ways: Trend line strategy, trend reversal divergence, forex trend strategy. Day 4: OBV -2,000 8,000 6,000.