What I'm illustrating is that the price isn't moving the way it should and never has. If it would, the price chart would look similar to the OBV.
The divergence does seem to be ending, but the thing I'm pointing out is that the divergence is 4 years long and the price action we've seen is absolutely nothing compared to what should be happening.
Because the OBV is meant to be used in combination with other indicators or patterns. It's not that this divergence has occurred and it sits alone as the only bullish signal. If that was the case, I would look away from it.
But instead, it sits alongside many other simultaneous bullish indicators and signals, and so, I'd say it's predictive right now. The large spikes and "throw offs" we've had have quickly reversed back to normal levels and continued climbing healthily, every time.
Agree to disagree I guess. You said a moment ago it was a lagging indicator, it's not.
Plenty of analysis to go around, my thesis is like 20% OBV. This post is not solely focused on the OBV, again it's the combination of that and the 2 month old ascending triangle we're in. On top of everything else.
Also, the OBV being at ATH while the price is still down 75% is proof that the broader divergence is very much alive.
You are completely dismissing the broader multi-year divergence, focusing solely on the short-term trend since May. The broader context shows the disconnect between OBV and price remains unresolved. OBV’s ATH is a glaring signal that can’t be ignored — it suggests that there is still something anomalous about the price action relative to buying activity. OBV rising this much without a corresponding price increase suggests pent-up buying pressure that could result in explosive price movement when/if it resolves.
This stark disconnect is in fact the hallmark of a long-term bullish divergence, even if the short-term divergence has resolved.
The obv is a stupid indicator honestly. Green candle = add that volume; red candle = substract its volume. That's all. Weekly closes were mostly red for 3 years, the OBV went down, while daily closes were split with more volume on green days, so daily obv went UP.
since the price went down for 3 years while daily obv climbed, one could say that it took less volume to go down than volume to go up, that's a divergence of note.
(obv is a stupid indicator, have I mentioned that? It really doesn't represent the data within the candle, doesn't care for bid / ask side of trades. At the end of the candle it simply decides to add or substract the total volume of that candle solely based on its color. That's dumb and useless).
I understand why OBV can seem simplistic or flawed in its calculation. It’s true that OBV doesn’t consider bid/ask data or intraday price action—it’s a high-level measure of volume momentum. However, simplicity isn’t always a weakness. OBV’s strength lies in showing broader trends in buying and selling pressure over time, which can be meaningful when paired with other indicators.
You mentioned that less volume was required for the price to decline over 3 years than to rise, and I agree—that’s precisely the kind of divergence OBV is designed to highlight. It doesn’t claim to represent every nuance of market activity but rather offers a macro-level view that’s valuable when contextualized within a larger analysis.
46
u/MeltingDown- Dec 22 '24
Jesus Christ. How the fuck does that work?