The On Balance Volume
(OBV) is a running total of volume.
It shows if volume is flowing into or out of a stock on
the stock market.
When the security closes higher than the previous period's
close, all of the day's volume is considered up-volume.
When the security closes lower than the previous period's
close, all of the period's volume is considered down-volume.
di = +1 if Ci > Ci-1
OBVi = Vi * di + OBVi-1
The basic trading rules all assume that changes in the
OBV precede price changes
in the stock.
An example of one trading rule,
if money is flowing into the stock,
by a rising OBV and a rising stock price,
and then the OBV changes direction (goes down)
the assumption is that buyer
interest is flagging and one should prepare for a drop in