On Balance Volume (OBV): calculation and divergence
The OBV calculation, why its absolute value is meaningless, and how to read accumulation and distribution from its slope.
On Balance Volume is free on Basis — the button opens a live crypto chart with it already applied. No account, no trial and no limit on how many indicators you add.
Open the chartWhat it measures
OBV adds the whole of a bar’s volume when price closes up and subtracts it when price closes down. The running total is a crude measure of whether volume has been arriving on advances or declines.
Its value lies entirely in its direction. The number itself depends on when the calculation started and means nothing on its own.
The crudeness is deliberate and is the reason it has survived since the sixties: there are no parameters to tune, nothing to overfit, and no settings argument to have. What it gives up is any sense of degree — a one-tick close and a ten-percent close contribute their volume identically.
How it is calculated
These are the steps Basis performs, verified against the published definition.
- 1
Start the running total at zero on the first bar.
- 2
If this close is above the previous close, add this bar’s volume.
- 3
If it is below, subtract it. If they are equal, leave the total unchanged.
How to read it
- OBV making new highs alongside price confirms the move has volume behind it.
- Price making a new high while OBV does not is the classic distribution warning: the advance is happening on less participation than the last one.
- A flat OBV during a price move means volume is arriving evenly on both sides — the move is not being driven by one.
- Never read the level. Only the slope and the divergences carry information.
- Comparing OBV between two instruments is meaningless, since each running total starts wherever its history happened to begin.
Where it misleads
OBV counts an entire bar’s volume as buying or selling based only on the close, which is a very blunt assumption: a bar that closes up one tick after heavy two-way trade contributes all of its volume to the positive side. That is why order-flow tools that split volume by aggressor side give a materially different picture, and why OBV divergence should be treated as a prompt to look closer rather than as evidence on its own.
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Updated 2026-08-22 · Educational reference, not financial advice.