OBV Breakout Strategy Indicator

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

Volume Precedes Crude Oil Trading Price

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

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

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

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

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

Because the On Balance Volume indicator will add direction to the oil volume and form a general trend direction, a trader can compare the two - the crude oil 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 crude oil price & the indicator trend direction - then a trader should pay attention to know when to exit the oil market or when to open a new oil order depending on the oil trade signal.

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

Example of this Strategy

OBV Crude Oil Trading Break Out Indicator - Oil Trading Volume Breakout Strategy - On Balance Volume Indicator MT4