Volume Indicators

The main principles of using volume indicators:

• When volume decreases it means that there is less interest, so it may be time for a reversal or price consolidation.
• When volume increases it means that there is more interest, so it may strengthen the prevailing trend or a new trend may appear.
• Sometimes gradual decreasing in volume is accompanied by rapid price movements.
• Volume highs signal that it may be time for a reversal.

On Balance Volume — OBV

1) If the current close price is above the preceding one, that is C( i ) > C(i — 1), then: OBV(i) = OBV(i-1) + Volume (i)

2) If the current close price is below the preceding one, that is C( i ) <>

wnere
C( i ) - current Close;
C(i - 1) - Close of the previous bar;
Volume (i) - current bar volume.