Description

• It is a momentum indicator that shows the association of change in price with the effect of volume
• It shows the relationship between price and volume
• It helps in understanding power of volume to pull price down or push price up
• It is variant of another popular indicator OBV (On Balance Volume)

Interpretation

• Rising A/D line indicates that security is being accumulated
• Falling A/D line indicates that security is being (sold) distributed
• Divergence between indicator A/D line and price graph implies that a reserve is about to occur
• When divergence occurs, price changes to confirm accumulation/Distribution line

Default Parameters Used/Inputs

• High Line
• Low Line
• Close Line
• Qty Line

Returns/Output

Accumulation/Distribution Line value for the stock

Formula

A/D Line = [ {(close – low) – (high – close)}/ (high – low) ] * Volume