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| On-Balance Volume (OBV) |
| On-Balance Volume (OBV) is used to detect momentum, the calculation of which relates volume to price change. The OBV provides a running total of volume and shows whether this volume is flowing in or out of a given security. |
The OBV attempts to detect when a security is being accumulated by a large number of buyers or sellers. Traders will use an upward sloping OBV to confirm an up trend, while a downward sloping OBV is used to confirm a downtrend. Finding a downward sloping OBV while the price of an asset is trending upward can be used to suggest that the "smart" traders are starting to exit their positions and that a shift in trend may be coming.
Figure: An OBV chart of Hang Seng Bank
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Chart Guide
