The On Balance Volume is the running total of volume calculated in such a way as to add the day's volume to a cumulative total if the day's close was higher than the previous day's close and to subtract the day's volume from the cumulative total on down days. The assumption is that changes in volume will precede changes in price trend. On Balance Volume was created by Joseph Granville and has a number of interpretive qualities and should be used in conjunction with other indications of price trend reversals. Another use of On Balance Volume (OBV) is to look at the trend in the indicator. A rising trend in the OBV gives sign of a healthy move into the security. A doubtful trend, or sideways trend in the OBV leaves price trend suspect and a candidate for a reversal of the trend. A falling OBV trend signals an exodus from the security despite price activity and leads to the caution that price may follow if it is not already. Look for divergences between the price and the OBV indicator. Divergences between the peaks warns of a potential fall in prices. Divergences between the troughs warns of a potential rise in prices.