The On-Balance Volume (OBV) index is a technical analysis tool that measures the flow of volume in a particular financial asset. It provides insights into the relationship between volume and price movements, aiming to identify potential trend reversals and confirm the strength of existing trends.

The OBV index is calculated by adding the volume of a trading period to a running total if the price closes higher than the previous period's closing price, and subtracting the volume if the price closes lower. When the OBV line is trending upwards, it suggests that buying pressure is dominant, indicating a bullish trend. Conversely, a downward-trending OBV line signifies selling pressure and a bearish trend.

Traders and analysts use the OBV index to spot divergences between the volume and price, which could signal a potential change in trend. If the OBV line starts to move opposite to the price trend, it may indicate weakening momentum and a possible trend reversal.

By incorporating volume analysis, the OBV index provides valuable insights into market dynamics, helping traders make informed decisions based on the relationship between price and volume.