OBV with MA & Bollinger Bands by Marius1032

OBV with MA & Bollinger Bands by Marius1032

This script adds customizable moving averages and Bollinger Bands to the classic OBV (On Balance Volume) indicator. It helps identify volume-driven momentum and trend strength.

Features:

OBV-based trend tracking

Optional smoothing: SMA, EMA, RMA, WMA, VWMA

Optional Bollinger Bands with SMA


Potential Combinations and Trading Strategies:

Breakouts: Look for price breakouts from the Bollinger Bands, and confirm with a rising OBV for an uptrend or falling OBV for a downtrend.

Trend Reversals: When the price touches a Bollinger Band, examine the OBV for divergence. A bullish divergence (price lower low, OBV higher low) near the lower band could signal a reversal.

Volume Confirmation: Use OBV to confirm the strength of the trend indicated by Bollinger Bands. For example, if the BBs indicate an uptrend and OBV is also rising, it reinforces the bullish signal.



1. On-Balance Volume (OBV):
Purpose: OBV is a momentum indicator that uses volume flow to predict price movements.
Calculation: Volume is added on up days and subtracted on down days.
Interpretation: Rising OBV suggests potential upward price movement. Falling OBV suggests potential lower prices.
Divergence: Divergence between OBV and price can signal potential trend reversals.

2. Moving Average (MA):
Purpose: Moving Averages smooth price fluctuations and help identify trends.
Combination with OBV: Pairing OBV with MAs helps confirm trends and identify potential reversals. A crossover of the OBV line and its MA can signal a trend reversal or continuation.

3. Bollinger Bands (BB):
Purpose: BBs measure market volatility and help identify potential breakouts and trend reversals.
Structure: They consist of a moving average (typically 20-period) and two standard deviation bands.
Combination with OBV: Combining BBs with OBV allows for a multifaceted approach to market analysis. For example, a stock hitting the lower BB with a rising OBV could indicate accumulation and a potential upward reversal.


Created by: Marius1032