How to Predict Forex Market Moves with On Balance Volume and the Descending Broadening Wedge

The Hidden Formula Only Experts Use

If you’ve ever felt like the Forex market is conspiring against you, don’t worry—you’re not alone. Many traders watch their positions nosedive like a doomed reality TV romance. But what if there was a way to spot market reversals before they happen? Enter On Balance Volume (OBV) and the Descending Broadening Wedge (DBW)—two powerful tools that the big players use but almost no one talks about.

When combined, these two indicators can uncover high-probability trading setups that others miss. Ready to level up? Let’s break it down.

Why Most Traders Get It Wrong (And How You Can Avoid It)

Most traders treat indicators like a buffet—they pile on too many and hope one works. But in reality, the pros keep it simple and focus on volume.

???? Common Myth: Price action alone dictates market movements.
???? Truth: Volume is the real fuel behind price moves.

On Balance Volume (OBV) is a leading indicator that shows the strength of buying or selling pressure. It doesn’t just react to price—it anticipates price movement. Pairing it with a Descending Broadening Wedge (DBW) pattern? Now, that’s where the real magic happens.

What Is On Balance Volume (OBV)?

On Balance Volume (OBV) was developed by Joe Granville and is based on a simple principle:

• If the closing price is higher than the previous close, the volume is added to the OBV line.
• If the closing price is lower, the volume is subtracted from the OBV line.

This creates an accumulation-distribution dynamic that allows traders to spot when big institutions are quietly accumulating positions—before price takes off.

???? Elite Trader Tip:

If OBV is rising while price is in a descending wedge, that’s a powerful bullish divergence—meaning a breakout is coming!

Cracking the Code: The Descending Broadening Wedge (DBW)

A Descending Broadening Wedge (DBW) is one of the most misunderstood patterns in Forex. While retail traders panic-sell, smart money is getting ready to buy.

How to Spot a DBW:

✅ Price makes lower highs and lower lows within an expanding range.
✅ Volume decreases on declines and spikes during rallies.
✅ Breakout direction is usually bullish, catching traders off guard.

This pattern appears when fear is at its peak—just before a reversal.

The Secret Play: Combining OBV with the Descending Broadening Wedge

The real power comes when we combine OBV and DBW to confirm breakouts.

???? Step 1: Identify a Descending Broadening Wedge on the chart.
???? Step 2: Check OBV—if it’s rising while price is falling, institutions are accumulating.
???? Step 3: Enter long just above the upper resistance trendline once OBV confirms the breakout.
???? Step 4: Place a stop-loss below the last swing low and target previous resistance as the first take-profit.

???? Why It Works: Institutions can’t hide their footprints in volume. OBV exposes their hidden accumulation, giving you an edge over 90% of traders who rely solely on price action.

Real-World Example: EUR/USD Trade Setup

In November 2023, EUR/USD formed a Descending Broadening Wedge on the 4H chart. Retail traders were shorting aggressively. However, OBV was trending upwards, signaling hidden buying pressure.

???? What Happened Next?
1️⃣ OBV continued climbing while price made lower lows.
2️⃣ Price broke the upper trendline with a massive bullish candle.
3️⃣ EUR/USD rallied 150 pips in three days.

Traders using OBV and DBW spotted this setup before the breakout, making bank while others got caught on the wrong side.

Next-Level Tactics to Maximize Profits

1️⃣ Use Multi-Timeframe Analysis: Check OBV & DBW on the 1H, 4H, and Daily for strong confluence.

2️⃣ Wait for Volume Confirmation: A breakout with low volume is likely a fakeout. Watch for OBV to confirm the move.

3️⃣ Avoid Trading Against Fundamentals: If major news contradicts your technicals, reconsider the trade.

Final Thoughts: How to Apply This Right Now

???? Start scanning for Descending Broadening Wedges on your charts.
???? Use OBV as confirmation before jumping in.
???? Trade with conviction—now you have an edge most traders don’t.

Looking for even more exclusive strategies and insider Forex techniques?

???? Join our expert trading community at StarseedFX for real-time analysis, daily signals, and elite education!

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Image Credits: Cover image at the top is AI-generated