Corning Inc GLW On Balance Volume (OBV) Chart
The concept behind the indicator: volume precedes price. OBV is a simple indicator
that adds a period's volume when the close is up and subtracts the period's
volume when the close is down.
A cumulative total of the volume additions and subtractions forms the OBV line.
This line can then be compared with the price chart of the underlying stock
to look for divergences or confirmation.
A rising volume can indicate the presence of smart money flowing into a stock.
A rising (bullish) OBV line indicates that the volume is heavier on up days.
If the stock price is likewise rising, then the OBV can serve as a confirmation of
the price uptrend. In such a case, the rising price is the result of an increased
demand for the stock, which is a requirement of a healthy uptrend.
If stock prices are moving higher while the volume line is dropping, a negative divergence
is present. This divergence suggests that the uptrend is not healthy and should
be taken as a warning signal that the trend will not persist.
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