Chaikin Accumulation Distribution Line (A/D Line)
Summary This indicator is a volume based indicator developed by Marc Chaikin which measures the cumulative flow of money into and out of an instrument. The A/D line is calculated by multiplying the specific period’s volume with a multiplier that is based on the relationship of the closing price to the high-low range. The A/D Line is formed by the running total of the Money Flow Volume. This indicator can be used to assert an underlying trend or to predict reversals. CalculationA/D Line = Previous A/D Line + Current Period's Money Flow Volume where, Money Flow Volume = Volume of current period x Money Flow Multiplier
The Money Flow Multiplier ranges between -1 and +1. The combination of a high positive multiplier value and high volume indicates buying pressure. So even with a downtrend in prices when there is an uptrend in the Accumulation Distribution Line there is indication for buying pressure (accumulation) that may result to a bullish reversal. Conversely a low negative multiplier value combined with, again, high volumes indicates selling pressure (distribution). ![]() |
