123 AccumulationDistribution Index (ad)

Accumulation/Distribution indicator utilizes the relative position of the close to it’s High-Low range with volume.Then it is accumulated.

Formula: AD = cumulative ((((Close - Low) - (High - Close)) / (High - Low)) * Volume))

This is actually the simplest benefit of using the ADL. During a strong uptrend or a strong downtrend, The ADL will actually move in the same direction as price confirming the current trend: volume supports the direction of the trend.

Figure 13.7: AccumulationDistribution Index

It can also reveal trends, in divergencies: Bullish ADL Divergence is when the ADL is trending upwards while price is trending down.

Figure 13.8: AccumulationDistribution Index