Thanks to varun sir.......
Hi guys. Most of you have not understood the relevance of OBV. Let me tell you what it is and what it is expected to achieve. In plain and simple terms OBV can be construed as the market bias indicator. My understanding is there cannot be a real increase in price in absence of volumes. This is the basis of my studies. To understand volume action better and in a more tangible way we can mark 3 points (in any time frame that you trade). These are the 1st line to be drawn as reference point in OBV charts is the end of the 1st bar on opening in whichever time frame you trade. (meaning 9:16 in 1min. bar, 9:18 in 3 min. bar and 9:20 in 5 min bars). The second horizontal line at 11:00 and the 3rd at 1:00 PM. These lines may be treated as zero lines. i.e to take long only signals when OBV values are above these reference lines and short only signals below it (with proper sl's). You may mark another line at 2:30 to achieve the same objective. Now these 3 lines would become your supports and resistance lines of OBV for the day. Pull up any chart and backtest and you would see amazing results. Price movement without volume support would only fall like a house of cards sooner rather than later. In fact such a scenario gives rise to divergence trade which has an excellent win/loss ratio and RR.
