Core Logic and Classic Cases of OBV Energy Tide Index

OBV (On-Balance Volume) is a classic volume and price analysis indicator proposed by Joe Granville, which reflects the flow of funds in the market by combining price movements and trading volume to help determine the strength of trends and potential reversal signals.

core logic

Volume is the driving force of price changes, capital inflows (rising volumes) drive the continuation of the trend, and capital outflows (falling volumes) may signal a reversal.

OBV line up → capital inflows, bullish signal.

OBV line down → outflows, bearish signal.

The advantages and disadvantages of OBV:

Simple and intuitive, suitable for judging the flow of funds.

It is very effective for trend confirmation and divergence analysis.

Disadvantages:

In a volatile market, there may be frequent fluctuations, generating false signals.

It cannot be used alone, but must be combined with price action or other indicators (e.g. MACD, RSI).

actual case

Case Study: Bitcoin (BTC) Rises in Early 2023

The price broke through $20,000, while the OBV continued to rise → confirming a bull market, followed by a sharp rise.

Later, the price reached a new high, but the OBV did not reach a new high → the top diverged, and then retreated.

Application in combination with other metrics

1.OBV+MACD

-MACD Gold Fork + OBV up → Strong buy signal.

-MACD dead fork + OBV down → strong sell signal.

2.OBV+RSI

-RSI oversold (< 30) + OBV starts to rise → bottom rebound signal.

RSI overbought (> 70) + OBV starts to decline → top callback signal.

3. OBV + moving average system

The price is above the 200-day moving average + OBV rising → trend is strong, buy bargains.