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Registered User
Joined: 3/6/2005
Posts: 30
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Hi,
I've noticed on numerous occasions when OBV plotted on a weekly price chart shifts from a positive divergence to a negative one based on one day of data. Also, OBV shifts relative to the price chart when you focus in or out on a chart. To the point, I cannot use OBV reliable on weekly charts because of its tendency to shift from day to day. Any solutions?
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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The trainers cannot give settings, interpretation or investment advice. I'll move this topic to the Stock and Market Talk forum where other traders are more likely to see it and comment. You may wish to review the following:
Dealing with OBV & MS in PCF's - how to interp their "values"
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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I get the impression you are looking at OBV and Price plotted in the same window. Keep in mind that they are not on the same scale so where OBV is "relative to price" is meaningless.
What matters with OBV is where is now vs. where it has been in the past relative to where price is now and where price has been in the past. It is much like MoneyStream (another cumulative indicator).
You should read the Peter Worden post here: MoneyStream
- Craig
Here to Help!
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Registered User
Joined: 12/19/2004
Posts: 457
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The more you aggregate the volume data (by going up in time frame), the less accurate your conclusions are.
I would not look at OBV on a weekly chart. To determine a volume trend, it might be better to use either a linear regression on price and volume, or use a rate of change in volume as a custom indicator.
On a weekly chart, a 52 bar rate of change makes sense, in that it compares recent volume with the same week last year.
Sometimes volume on daily charts can be distorted by seasonal factors such as holidays. This indicator corrects for that.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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dcash27
OBV is OBV. If it is not doing what you want you may have to find
something else.
The only alternative is to add some type of smoothing.
A moving average or liner regression between price and OBV.
I have also seen OBV used with dual moving averages.
Thanks
diceman
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Registered User
Joined: 1/1/2005
Posts: 2,645
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QUOTE (dcash27) I've noticed on numerous occasions when OBV plotted on a weekly price chart shifts from a positive divergence to a negative one based on one day of data.
Your observation is correct. It is because "weekly" is actually 5 days and not calender weeks. If you get a new day of data and then change to a "weekly" chart, every bar on the chart changes because each 5 day bar consists of a different group of 5 days than it was before the update.
All that anyone could ever want to know about OBV Divergences can easily be determined from daily charts.
Thanks,
Jim Murphy
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Registered User
Joined: 7/8/2006
Posts: 20
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again...why rely just on one indicator rather than comparing several indicators on different time frames for the same stock or index or whatever..does it not make sense at all?
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Registered User
Joined: 1/28/2010
Posts: 1
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Currently MSFT OBV daily value is - 1.3B. when I put formula OBV or OBV1.0 , it shows different value.
I am trying find ratio of OBV/XAVG(OBV,10), it does not match the value.
Pls help.
Thanks
Md
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Administration
Joined: 9/30/2004
Posts: 9,187
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OBV is cumulative and the PCF editor test doesn't use all of the available history. Your formula, OBV/XAVG(OBV,10) is correct.
I plotted it along with OBV and it's 10-bar average. Dividing OBV by it's 10-bar average on a calculator gave me the same value as your formula.
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