How Accumulation/Distribution Indicator works
This tool makes use of lines to indicate trends or potential turning points.
When confirming a trend:
- A/D line rises during an uptrend
- A/D line falls during a downtrend
- A downtrend is weakening to a bullish shift when A/D line and decreasing prices rise
- An uptrend is debilitating to a bearish change when A/D and rising prices fall
This indicator tool operates by multiplying the current volume of trades to the value of the closing position.
A/D (t) = [((C – L) – / (H – L)] x A/D (t – 1),
A/D (t) – current Accumulation/Distribution value;
A/D (t-1) – previous Accumulation/Distribution value;
H – current high;
L – current low;
C – close price