On Balance Volume Divergence (OBV) Indicator for MT5 Download - Free - [TFlab]

Joseph Granville designed the On Balance Volume Divergence (OBV) indicator, a practical tool for identifying divergences. This indicator combines volume and price movements to analyze buy and sell pressure in the market.

One of OBV's unique features is its ability to detect hidden trends and divergences, making it valuable for traders seeking lucrative trading opportunities.

Indicator Specifications

The table below briefly explains the details of this indicator:

Indicator in an Uptrend

In the one-hour chart of EOS cryptocurrency, the price registers a new low below the level identified by the indicator.

After recognizing the price trend, the indicator issues aBuy Signal, offering traders a suitable trading opportunity.

Indicator in a Downtrend

When the price rises but OBV decreases, this scenario indicates a bearish divergence. In the price chart of the AUD/NZD pair, the bearish divergence suggests a weakening of the price's uptrend.

This condition increases the likelihood of a reversal or a shift to a downtrend, and the indicator issues a Sell Signal after identifying these areas.

OBV Indicator Settings

The complete details of this indicator’s settings are visible in the image ahead:

• Chart Theme: Adjust the chart theme;
• Applied Price: Select the reference price (e.g. closing price) for indicator calculations;
• Draw Divergence: Enable the drawing of divergence lines on the chart;
• Show Classic Divergence: Display classic divergences to identify standard trend changes;
• Show Hidden Divergence: Display hidden divergences to uncover hidden trading opportunities;
• Divergence Visible On Subwindow: Display divergences in the indicator's subwindow;
• Divergence Visible On Chart: Display divergences directly on the price chart;
• Bullish Divergence Color: Choose the color of bullish divergence lines (typically light blue);
• Bearish Divergence Color: Choose the color of bearish divergence lines (typically pinkish purple);
• Alerts On: Enable alerts when divergence signals are detected;
• Alert Message: Send alert messages upon signal occurrence;
• Alert Email: Send alerts to the user's registered email address;
• Alert Sound: Enable sound alerts when divergence is identified;
• Sound File: Select a specific sound file.

Conclusion

The OBV indicator is notable for its ability to confirm ongoing trends and warn of potential trend reversals.

For example, alignment between OBV andprice indicates trend strength and continuity, while divergence between them warns of a potential trend change.