OBV Breakout Strategy Indicator - OBV Forex Breakout Indicator - Forex Volume Breakout Strategy

OBV Breakout Strategy is based on the popular stocks trading strategy, where stock investors use volumes to predict price direction, based on the concept "Volumes always precede price", in forex market, there is no central clearing house where forex volumes are aggregated, so in forex traders use a forex indicator that will estimate the volumes. This forex indicator is known as OBV - On Balance Volume.

Volume Precedes Price

Volumes always precede price, this makes volumes a leading forex indicator. Knowing how to interpret this volumes indicator helps forex traders make better decisions when it comes to predicting where the market will be moving to next - volume indicators can be used by traders to come up with a forex breakout trading strategy.

When volume rises this shows that money is starting to flow into a forex instrument. Because volumes will always precede the forex price, the next thing is that the forex price will then go up - Forex Breakout Strategy Indicator. When the OBV indicator is going up it shows there are more buyers than sellers.

When the forex volume falls it shows that money is starting to flow out of a forex instrument. Because volumes will precede the forex price, the next thing is that forex price will then go down. When the OBV forex indicator is going down it shows more trading volume is selling than buying.

Subsequently, when a downward trend line of the OBV indicator is broken it shows that sellers are starting to take profit & close their sell orders.

Likewise, when the upwards trend line of the OBV indicator is broken it shows that buyers are starting to close their buy trades & take their profits.

Because the On Balance Volume indicator will add direction to the forex volume and form a general trend direction, a trader can compare the two - the forex price trend direction and the OBV indicator trend direction. The direction of these two should correspond and move in the same direction but when there is a disconnect between these two - the price and the indicator trend direction - then a trader should pay attention to know when to exit the forex market or when to open a new forex order depending on the forex trading signal.

On Balance Volume is a forex leading indicator and a trader using this indicator can avoid entering the market when it is too late. OBV Indicator is also a good forex indicator to show when to take a profit early enough before the market trend reverses and takes away all your profit.

Example of this Strategy

OBV Breakout Strategy Indicator - OBV Forex Breakout Indicator - Forex Volume Breakout Strategy - On Balance Volume Indicator MT4 - OBV Volume Breakout Indicator MT4