An advanced On Balance Volume (OBV) indicator that identifies divergences between price and volume, helping traders anticipate potential market trend reversals or continuations.
Explore complementary indicator rolesHow it works
The MADALGO Enhanced OBV Divergences indicator analyzes the relationship between price action and On Balance Volume by tracking cumulative volume changes. It systematically scans for both regular and hidden bullish/bearish divergences by comparing price highs/lows with corresponding OBV movements within customizable lookback periods.
The indicator calculates divergences by examining the relative positions of OBV and price movements, using configurable pivot lookback ranges. It generates visual signals highlighting potential trend reversals or continuations, while also providing additional insights through a moving average of the OBV and a Rate of Percentage Change (RPC) calculation.
Why it may be useful
The OBV Divergences indicator is crucial because it helps traders understand the underlying volume dynamics that often precede significant price movements. By identifying discrepancies between price action and volume, traders can gain deeper insights into market sentiment and potential trend changes before they become apparent through price alone.
The indicator's ability to detect both regular and hidden divergences provides a comprehensive view of market momentum. This allows traders to make more informed decisions by recognizing potential trend reversals or confirmations, ultimately improving their ability to time entries and exits with greater precision.
When to explore it
The MADALGO OBV Divergences indicator is most effective in markets with clear trending characteristics and significant volume activity. It works particularly well in liquid markets such as major stock indices, forex pairs, and heavily traded commodities where volume patterns can provide meaningful insights into price movements.
Traders should utilize this indicator during periods of potential trend transitions, when price movements seem ambiguous or uncertain. It is especially valuable when combined with other technical analysis tools, helping to confirm signals and provide additional context for trading decisions across various timeframes and market conditions.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
![[EVI]Enhanced Volume Indicator chart preview](https://s3.tradingview.com/g/gAVD5huu.png?v=1716517645)
