OBV is a technical index with the full name of "On Balance Volume" and the Chinese name of "Energy Tide".It was developed by Joseph Granville in 1963.OBV measures the buying and selling pressure of the stock market by calculating the change of trading volume, which is a volume price analysis method.[1-2]
The On Balance Volume (OBV) was proposed by Joe Granville in the 1960s and is widely used.
When the OBV is at a high level, it means that the current market has a large volume of transactions, and the buying power of the market is strong. Buying may be gradually consumed, and the possibility of market adjustment will also increase.When the OBV is at a low level, it means that the current market volume is small, and the selling power of the market is strong, which may lead to the gradual consumption of selling, and the possibility of market rebound will also increase.[2]
It should be noted that OBV is only a technical indicator and cannot be used as a basis for stock trading alone. It needs to be comprehensively analyzed in combination with other indicators and fundamentals.[2]
In short, when the OBV is at a high level, it means that the current market volume is large, and the buying power of the market is strong, but it may also be gradually consumed, and the possibility of market adjustment will increase.[1-2]
computing method
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On a daybase period, accumulated dailyListed stocktotalvolume, if the next dayindexOr the stock rises, the base period OBV plus the trading volume of the day is the OBV of the day.If the index or stock falls on the next day, the OBV of the base period minus the trading volume of the current day is the OBV of the current day.Generally speaking, only observationOBVThe lifting and lowering of is of little significance and must be coordinatedK lineThe trend of the graph has practical effect.
Because the calculation method of OBV is too simple, it is vulnerable to accidental factors. To improve the accuracy of OBVEmptyThe net ratio method is used to revise it.
Net amount of long/short ratio=[（Closing price－minimum price）- (highest price - closing price)] ÷ (highest price - lowest price) × V
This method has higher reliability than the simple OBV method by weighting and modifying the trading volume according to the ratio of multi air force.
Application rules
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1. Whenprice of stockAscendingOBV cableDescending, indicatingBid Weak, the stock price may fall back.
2. When the stock price drops and the OBV line rises, it means that there is a strong buying trend, and the stock price may stop falling and rise after bargain hunting.
3. The OBV line rises slowly, indicating that the buying is gradually strengthened, which is a buying signal.
4. When the OBV line rises rapidly, it means that the force will be exhausted toSell signal。
5. When the OBV line turns from a positive cumulative number to a negative number, it is a downward trend and should be soldShares held。Conversely, when the OBV line turns from a negative cumulative number to a positive number, you should buy stocks.
6. The biggest use of the OBV line is to observe when the stock market will break away from the market after consolidation and the future trend after breakthrough. The direction of change of the OBV line is an important reference index, and its specific value has no practical significance.
7. OBV pairDouble roofThe determination of the second peak has a relatively standard display, whenprice of stockIf the OBV line can rise with the stock price trend and the price and volume match, it will be sustainablelong positionThe market also reached a higher peak.On the contrary, when the stock price rises again, the OBV line fails to cooperate synchronously, but it falls, which may form a second peak and complete the form of double peak, leading toStock price reversalfall.
