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On-Balance Volume And The Bollinger Band

On-Balance Volume

* The on-balance volume (OBV) indicator is a cumulative total of volume, calculated by adding the volume on days the price is higher than the previous day and substrating the volume on days the price is lower than the previous day.

* The OBV indicator tells you how much money is flowing into or out of an instrument.

* If OBV is falling, it indicate that people are selling the stock, conversely, if OBV is rising, it means that people are buying into the stock.

* Premise – if a stock is going up, meaningfully, good volume is needed (vice versa, same holds true, if a stock is decreasing).

* If the stock price is going up and the OBV is coming down, an indication that the stock is being distributed (i.e. sold) be the smart money.

Bollinger Band

More on Bollinger Band (both video and written explanation) can be found at bollinger band.


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