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Indicators based on volume: OBV (On Balance Volume)
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The OBV is a line used to try to detect sale or purchase pressures on a stock. The OBV line represent the cumulated volumes from one day to the other. If the today's price is higher than yesterday, you add the daily volume to the cumulated volumes of the previous day. If today's price is lower than yesterday, you subtract the daily volume to the cumulated volumes of the previous day.

Interpretation

The OBV must be analyzed in line with the general trend of the underlying stock. As the volume indicator, OBV is used to confirm a trend.

• In a positive trend, if the stock price is closed to his new high, the OBV should be at his maximum as well (and of course at his minimum in a negative trend).
• If the market is looking for a direction, the OBV is analyzed another way. If the price is in the bottom side of his current trading range and if, at the same moment the OBV increases, the OBV shows us that there is accumulation on the stock and that the prices should start to climb. The sale signal is given when the OBV decreases (distribution). 

The weakness of the OBV is that it doesn't take into account the prices fluctuation. That's why the volume accumulation indicator has been introduced.

Graph Example: OBV

The OBV is in the lower part of the graph. The Zero line is drawn in red..