How does on-balance volume indicator work in cryptocurrency trading?

1 answers

• Jan 14, 2022 · 3 years ago
  The on-balance volume (OBV) indicator is a powerful tool in cryptocurrency trading. It measures the cumulative volume flow of an asset, taking into account whether the price closes higher or lower than the previous close. When the OBV line is rising, it indicates that buying pressure is increasing, potentially signaling an uptrend. Conversely, a falling OBV line suggests selling pressure and a possible downtrend. Traders can use OBV to confirm the strength of a trend, identify potential reversals, and spot divergences between price and volume. However, it's important to remember that OBV is just one piece of the puzzle and should be used alongside other indicators and analysis techniques for more accurate trading decisions.
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