On Balance Volume for the Forex
If you are looking to confirm price moves then look no further than the On Balance Volume technical indicator. The theory is during a strong trend the volume will be greater on days when the prices move in the direction of the trend. To simplify this, when prices go up so does the On Balance Volume Indicator, and whenever the indicator fails to make a new high along with prices, we have a strong indication that it is a very weak move, which is likely to collapse.
Woods and Vignolia first presented On Balance Volume back in the early 1940’s under the name of “cumulative volume”. The On Balance indicator is used on both individual currency pairs as well as on the whole market.
Volume is arrived on a cumulative total volume by taking adding volume on an up day (close higher than previous close) and subtracting volume on a down day.