Accumulation/Distribution Oscillator


The Accumulation/Distribution Oscillator is a volume-based indicator that measures underlying supply and demand by calculating a running total of each period’s Money Flow Volume.  The oscillator looks at the difference between a fast and slow moving average of the ADL.  If the oscillator is falling, it can be a sign that traders are turning bearish and vice versa when the indicator is rising. It calculates the difference between the accumulation and distribution volumes over a specific period, oscillating around a zero line to indicate the momentum of buying versus selling pressure.

Input Parameters:

  • Fast: Fast moving average length (preset to 6).
  • Slow: Slow moving average length (preset to 10).

Use Cases:

  1. Positive divergence (rising A/D Oscillator and falling price) indicates a potential bullish reversal. In contrast, negative divergence (descending A/D Oscillator and rising price) suggests a possible bearish reversal.
  2. Combining the A/D Line with other indicators: Use the A/D Line in conjunction with other technical indicators, such as moving averages and Relative Strength Index (RSI), to improve the accuracy of your analysis.
  3. Identifying entry and exit points: When the A/D Line breaks above or below a trendline or support/resistance level, it can signal a potential entry or exit point.

Do you want to learn more? Check out our Learning Center Article and YouTube Series.


May 17, 2024

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