On Balance Volume

The On Balance Volume (OBV) is a very elementary volume indicator developed by Joseph E. Granville, based on the assumption that large investors enter (accumulation phase) or exit (distribution phase) from the market ahead of time to the mass of investors. In fact this indicator takes into consideration the evolution of volumes in relation to the price trend ie it represents the algebraic sum of the volumes traded in the various stock exchange sessions.
If the CLOSE is greater than the previous CLOSE, the VOLUME is added to the previous VOLUME, if the CLOSE is lower than the previous CLOSE the VOLUME is subtracted from the previous VOLUME, if the CLOSE is equal, the VOLUME of the previous survey is assumed.
The result is a curve that serves to confirm a TREND. Many criticisms have been directed at this indicator, believing that it does not faithfully reflect which side the volumes were. In fact, a day with positive high volumes that closes slightly negative gives a negative color to the whole volume of volumes treated.