Lesson 3: How On Balanced Volumes relates to uptrend/downtrend of a particular stock?

Volume Lesson, continued with Lesson 3:

Let's move on in-depth on the next lesson, How is the relationship of OBV has on the stock market.

OBV, as discussed previously was one of the important factor to determine the direction of the market. We can't take only this to trade the market, if not, everyone will only use this to trade and succeed in the market. But , OBV can be one of the confirmation factors to check the direction of the stock movement, at least with the flow of the money in/out and how it co-relates to accumulation/distribution...
How does OBV co-relates with the accumulation/distribution ? OBV attempts to check the level of accumulation/distribution by the means of comparing the stock volumes to price movements.

Volume is added to indicator if closing price is UP and subtracted if closing price is down. The basic assumption, regarding OBV analysis, is that OBV changes precede price changes. When the money is flow into the stock, the accumulation will increase with the price of the stock increase is one of the confirmation for OBV that surge ahead.

Example, How OBV confirms the price movement of a stock , When the price move in the dominant direction, with strong uptrend more or HUGE volume on Price UP days versus Price DOWN days, there is a sign that strong uptrend will emerge. As a confirmation rule, strong heavier volume should follow the trend of the price trend.
Likewise, for a huge Volume that happens on the days where the price is decreasing with OBV is on the downtrend, that could means that the direction is about to change. Also, if the price is rising but with a flat line OBV, that also means there isn't any volume support on this.
Conclusion is, when there is a breakout of OBV lines when the price is on downtrend / uptrend , there is when we can detect the price direction of the movement for that next few days when the interest of stock has emerged.


Thanks,
Star-Trader