Sounds like a simple question I know, but here is the basis for the question. Like most packages, my software will color code volume. I have red for down days and black for up days. I notice, however, that the color coding is based on the relationship of the close to the open vs the relationship of today's close to yesterday's close. For example, you can see with KLAC that there are days where the stock gapped higher, closed lower, yet the close is still higher than the previous day's close. I haven't checked to see how this relates to OBV, because I don't use it. But I wonder about the accuracy. So what constitutes a down day?
to see the gap relative to prev close or open, is something you can configure in some charting packages
Thanks trader 42, however I think I haven't been clear enough with the question. Perhaps a recent example will better illustrate my question.... you know, a picture and a thousand words, etc. On Wednesday last week, SLB gapped open significantly lower, found the low almost immediately and rallied the rest of the day. With candles, it is easy to see that the close is higher than the open, thus an up candle, or white for me; yet the close was lower than the previous close. So you have a white (up) candle, but a down close. The volume bar reflects the up candle with my service. My question is ... is the volume considered positive volume because the close was higher than the open, or should it be negative volume because the close is lower than the previous close? Edit: I just checked the OBV study and it counted Weds volume as negative. I'm going with that, but other opinions are appreciated.