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What is the On-Balance Volume Indicator?
If you’re new to forex trading, you might be wondering what technical indicators are and how they can help you make better trading decisions. One popular indicator that many traders use is the On-Balance Volume (OBV) indicator.
The OBV indicator is a momentum indicator that measures buying and selling pressure based on trading volume. It was first developed by Joseph Granville in the 1960s and has since become a popular tool for technical analysts.
The OBV indicator is calculated by adding the trading volume of a currency pair on days when the price increases and subtracting it on days when the price decreases. The resulting total is then added to the previous day’s total to create a running total.
The idea behind the OBV indicator is that volume precedes price, so changes in the OBV line can help predict future price movements. When the OBV line is moving higher, it suggests that buying pressure is increasing and the price is likely to follow. Conversely, when the OBV line is moving lower, it suggests that selling pressure is increasing and the price is likely to follow.
One of the unique features of the OBV indicator is that it can be used to confirm or contradict the direction of price movements. For example, if the price of a currency pair is rising but the OBV line is falling, it suggests that the price increase is not supported by strong buying volume and may not be sustainable.
In forex trading, the OBV indicator can be used in a variety of ways. Some traders use it to confirm trend reversals, while others use it to identify overbought or oversold conditions. It can also be used in conjunction with other technical indicators to create a comprehensive trading strategy.
In the following chapters of this book, we will explore the OBV indicator in more detail and show you how to use it to make smarter trading decisions. Whether you’re new to forex trading or an experienced trader looking for new tools, the OBV indicator is a powerful tool that can help you improve your trading results.
ASIN : B0BW9QHM2N
Accessibility : Learn more
Publication date : February 19, 2023
Language : English
File size : 864 KB
Simultaneous device usage : Unlimited
Screen Reader : Supported
Enhanced typesetting : Enabled
X-Ray : Not Enabled
Word Wise : Enabled
Print length : 41 pages
Page Flip : Enabled
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