Accumulation/Distribution (A/D) on Bitcoin

What it shows

The A/D line sits below the candles, climbing or sinking by each candle’s weighted volume. It has no zero line and no fixed scale. Only the direction of the line, and how it moves against price, tell you anything.

How Pravex works it out

1. For each candle, see where the close sits between the low and the high: +1 at the high, -1 at the low, 0 in the middle.
2. That position = ((close − low) − (high − close)) ÷ (high − low). A candle whose high equals its low scores 0.
3. Multiply the position by the candle’s volume.
4. Add the result to a running total that starts at the first candle loaded on the chart. The total is the line.
5. Made-up candle to show the step: high 10, low 0, close 8, volume 100 gives ((8 − 0) − (10 − 8)) ÷ 10 × 100 = +60 added to the total.
6. There are no settings. Nothing is smoothed and no length is involved.

Settings

Setting	Default	What changing it does

How traders read it

Compare the line with price. When price makes a higher high and the line makes one too, the volume backs the move. When price climbs while the line goes flat or turns down, closes are slipping toward the lows of their candles even as the level rises, which is worth a second look.

The reverse reading works the same way. Price drifting lower while the line rises says candles are closing near their highs even though the level is falling.

Ignore the number on the axis. The line is a running total, so its level depends on where the loaded data starts. Read slopes and turns, or draw a trendline on the line itself.

A running total has no ceiling or floor, so there is no overbought or oversold zone to wait for here.

When it misleads

The line only looks at the close’s place inside one candle, so a gap between candles is ignored: price can jump a long way between two candles and the line barely moves. One huge-volume candle shifts the whole line for good, because the total never forgets. On low timeframes with thin volume the line is noisy. This page uses bitcoin because spot gold carries no volume to add up.

Questions and answers

What does a rising Accumulation/Distribution line mean?

Candles are closing in the upper part of their range, and the volume on them is being added to the total. It describes where closes land, not who is buying.

Why does the line not start at zero?

It is a running total from the first loaded candle, so the level depends on how much history the chart holds. Compare its direction with price instead of its value.

How is it different from Price Volume Trend?

Price Volume Trend multiplies the percent change from the previous close by volume. This line ignores the previous close and uses only where the close sits inside its own candle.

Can I use the A/D line on gold?

Spot gold candles carry no volume, so every product in the sum is zero and the line stays flat. Use it on a market with traded volume, such as bitcoin.

Related: Price Volume Trend, Klinger Oscillator, Elder Force Index, every indicator.