OBV Breakout Strategy Indicator

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

Volume Precedes Commodity Price

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

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

When the commodity trading volume falls it shows that money is starting to flow out of commodity. Because volumes will precede the commodities price, the next thing is that commodities price will then go down. When the OBV commodity 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 upwards trend line of the OBV indicator is broken it shows that buyers are starting to close their buy commodities trades & take their profits.

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

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

Example of this Strategy

OBV Breakout Strategy Indicator - OBV Commodity Breakout Indicator - Commodity Trading Volume Breakout Strategy