Foreign exchange technical analysis indicators: the composition principle of the OBV household amount indicator.
The principle and calculation method of OBV indicator
The energy tide OBV indicator was proposed by Graham in the 1960s and is widely used. Four major elements of foreign exchange technical analysis: price, volume, time, and space. The OBV indicator is a technical indicator that uses the “quantity” element as a breakthrough to discover popular currencies and analyze the trend of exchange rate movements. It is to digitize and visualize the relationship between foreign exchange market’s popularity-trading volume and exchange rate, and to measure the driving force of foreign exchange market by the change of foreign exchange volume, so as to judge the trend of foreign exchange rate. Regarding the research on trading volume, the OBV energy tide indicator is one of the most important analytical indicators.
The OBV indicator is composed of the OBV value and the OBV line. The OBV line method is another great contribution of Grundfos. He extended the concept of “average volume” and believed that the trading volume is the strength of the foreign exchange market, and the exchange rate is just its apparent characteristics. Therefore, the trading volume usually precedes the exchange rate. This theory of “foreseeing quantity and later seeing quantity” has already been proved by the foreign exchange market.
The basis for the establishment of the energy wave theory is:
- The more inconsistent the investor’s comments on the exchange rate, the greater the volume; otherwise, the volume is smaller. Therefore, the volume of transactions can be used to judge the popularity of the market and the strength of both sides.
- The principle of gravity. Sooner or later the object will fall, and the energy required for the object to rise is higher than when it falls. When it comes to the foreign exchange market, it can be explained as: on the one hand, the exchange rate will fall sooner or later; on the other hand, the energy required when the exchange rate rises is large, so the rise of the exchange rate, especially in the early stage of the rise, must be matched by a larger volume; when the exchange rate falls, There is no need to consume a lot of energy, so the transaction volume is not necessarily enlarged, and even has a tendency to shrink.
- The principle of inertia-dynamic is constant, static is constant. Only those popular exchanges that are invested by investors or the main phase will fluctuate greatly in trading volume and exchange rate for a long period of time, while unpopular exchanges that are not in demand will have both trading volume and exchange rate volatility for a period of time. smaller.