On Balance Volume

On Balance Volume (OBV) is a momentum indicator based on the level of volume. It is calculated by adding up the volume for the period when the change in price is positive and substracting the volume for the periods when the change in price was negative. These calculations are performed of the selected number of periods. The indicator is based on the assumption that the change in the volume preceeds the change in price, so if the OBV rises, the increase in price should be expected to follow.

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