The OBV is calculated by taking the total volume for the trading period and assigning it a positive or negative value depending on whether the price was up or down during the trading period. If the price traded above the previous period it is assigned a positive value while a negative value is assigned when the price has fallen during the period.
Read more: http://www.investopedia.com/university/indicator_oscillator/ind_osc2.asp#ixzz2EDEUYCRh
Doesn't it use the closing price? We know that the closing price is manipulated a lot...If we were using technicals, wouldn't we want to use A/D lines? Again, my TA isn't very good but from investopedia:
One of the most commonly used indicators to determine the money flow of a security is the accumulation/distribution line (A/D line). It is similar to on-balance volume indicator but instead of only considering the closing price of the security for the period it also takes into account the trading range for the period. This is thought to give a more accurate picture of money flow than of balance volume.
Read more: http://www.investopedia.com/university/indicator_oscillator/ind_osc3.asp#ixzz2EDEza7vW
