📘 What are Volume and OBV?
Volume is how much of a coin traded in one candle. It shows how many people backed a move with real money.
OBV (On-Balance Volume) turns volume into one running line. On an up day, the day's volume is added. On a down day, it is subtracted. If OBV climbs, buyers are in control. If it falls, sellers are.
Price tells you WHERE the market went. Volume tells you HOW MUCH conviction was behind it. $BTC gives a clear live example right now.
📊 Live chart in the cover and in the image post below.
🔍 How to read volume
• Compare each candle with the average of the last 20 candles. 1.5x or more is a strong reading
• Breakout on high volume: many traders agree. The move tends to last
• Breakout on low volume: few traders joined. It fails more often (a fakeout)
• Big volume on a red candle near a high: sellers are taking profit
• Shrinking volume in a range: the market is waiting for a trigger
🔍 How to read OBV
• Ignore the OBV number itself. Only the direction matters
• Price and OBV both making higher highs = healthy trend
• Price making a high but OBV making a lower high = bearish divergence (weak buying)
• Price making a low but OBV making a higher low = bullish divergence (sellers tiring)
• OBV breaking out before price can be an early hint
📈 How traders use it
• Entry: take breakouts only when the breakout candle has above-average volume, or wait for a retest of the broken level
• Stop-loss: back inside the old range, because a breakout that falls back in has failed
• Target: the next key level, or the range height added to the breakout. Aim for at least 2x your risk
• Exit hint: price keeps rising but volume and OBV keep falling. The trend is running out of fuel
🧪 Live example: $BTC daily
• Sep 18: BTC jumped from $76,417 to $80,884 on 1.8x average volume
• Sep 21: BTC closed at $86,620 on 2.2x average volume, the biggest day of the move. OBV jumped from about -28K to +27.6K BTC in 4 days
• Oct 2: BTC tried $87,220, then closed red at $84,518 on 1.6x volume. Heavy volume on a rejection = sellers stepping in
• Oct 7-8: two red days on 1.3x volume took BTC to the $80,394 low
• Oct 9-11: the bounce to $84,199 came on just 0.4-0.7x volume. It faded on Oct 12
• Since Sep 21, daily OBV has dropped about 101K BTC to -73.4K, while price is only about 4% lower. That is a warning: more volume traded on down days than up days
• Today: BTC dipped to $81,034 and bounced to about $83,350. The 4H rebound candle has 2.0x average volume, the first strong buying volume in days
• What to watch: a daily close over $84,352 on above-average volume would confirm the bounce. A low-volume push up is more likely to fade again, with $80,394 as the floor
⚠️ Common mistakes
• Trusting a breakout without checking volume
• Reading OBV's level instead of its direction
• Comparing volume across exchanges or with a partial candle
• Ignoring big red volume near the top of a range
✅ Quick checklist
• Is the breakout candle's volume 1.5x its 20-candle average?
• Is OBV making the same highs or lows as price?
• Is the bounce built on rising or shrinking volume?
• Where is your stop if price falls back into the range?
• Is your risk 1-2% of your account?
💬 Do you check volume before you buy a breakout, or just the price? 👇
Not financial advice. DYOR.