OBV Meaning and
Definition
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OBV, an acronym for "On-Balance Volume," refers to a technical analysis tool widely used in the field of finance and investment. It is a momentum indicator that aims to measure the flow of positive and negative volume in relation to the price movement of a particular security or an entire market. OBV draws its foundation from the theory that volume precedes price and that changes in volume can often signal future price movements.
The calculation of OBV involves adding the volume of a particular trading period to a cumulative total if the price of the security closes higher than the previous period. Conversely, if the closing price is lower, the volume is subtracted from the cumulative total. This cumulative total is then plotted on a separate chart alongside the price chart, allowing investors to identify trends and patterns in relation to volume.
As a tool, OBV can provide valuable insights into the strength of a price trend. When the volume increases along with the price, OBV tends to rise, indicating a bullish outlook. Conversely, if the price declines while volume increases, OBV decreases, suggesting bearish sentiment. Divergence between the price and the OBV line may also indicate a potential reversal or change in trend.
In conclusion, OBV is a momentum indicator that tracks the relationship between price movements and trading volume. By plotting this information on a separate chart, investors can identify potential changes in market sentiment and better inform their investment decisions.
Common Misspellings for OBV
- 9bv
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- okbv
- olbv
- 0obv
- o0bv
- 9obv
- o9bv
- ovbv
- obvv
- onbv
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- obcv
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- obvg
- obfv
- oobv
- OjV
- o bv
- ob v
- ubve
- obvei
- -obv
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