A single cumulative line, adding a full day's volume on an up close and subtracting it on a down close — a divergence from price is a lead worth investigating, not a verdict.
Joseph Granville introduced OBV in his 1963 book, arguing that volume flow often shifts before price does.
OBV became linked to "smart money" quietly accumulating shares before a public price move — a popular but oversimplified story.
Traders leaned hard on price/OBV divergence as an automatic reversal call, inheriting the same overconfidence seen with RSI and stochastic divergence.
Careful use today treats OBV divergence as one input demanding confirmation, exactly like RSI or stochastic divergence.
On an up-close day, the entire day's volume adds to the running total; on a down-close day, it subtracts — nothing but that running sum.
When price makes a new high while OBV makes a lower high, that's a genuine flag — but exactly like RSI divergence, it needs price itself to confirm before it means anything actionable.
OBV's most reliable job is confirming a trend already in place — price and OBV climbing together describes genuine, volume-backed participation.
Through that entire rally, OBV made new highs right alongside price — genuine confirmation, not divergence, throughout.
Near that cycle top, OBV printed a lower high while price printed a higher one — and only once price itself rolled over did the warning genuinely pay off.
Price makes a new high while OBV makes a clearly lower high. A trader shorts the very next candle. Sound?
Price is climbing steadily and OBV is climbing right alongside it, making new highs together. What does this tell a trader?
A trader compares OBV's raw number today to its raw number a year ago and concludes something meaningful from the difference. Reasonable?
Price above, OBV below, watched tick by tick on the left — and the mark it leaves in the ledger on the right. A confirmed uptrend, a confirmed divergence with real follow-through — and an unconfirmed divergence that led nowhere.
An OBV divergence has appeared. Judge whether price has genuinely confirmed it yet — then call it: act on it now, or keep waiting.
The classic error is trading an OBV divergence as if it were a complete signal on its own. The discipline is mechanical: use OBV first to confirm trends already in motion, then treat any divergence purely as a lead requiring price's own confirmation before acting.
Granville's tally endures because it's a genuinely simple, honest measure of participation. Let it confirm what price is already doing, and treat any disagreement as a lead worth chasing down — never a verdict on its own.
Volume precedes price.