Accumulation Distribution Line

The Accumulation Distribution Line is a cumulative indicator that uses volume and price to assess whether an asset is being accumulated or distributed. It functions by calculating the close location value and multiplying it by the period volume to determine the flow of money into or out of an asset.

When the indicator rises, it suggests that buying pressure is dominating, signaling accumulation. When it falls, it indicates that selling pressure is prevalent, signaling distribution.

Traders look for divergences between the indicator and the price to identify potential trend reversals. If the price is hitting new highs but the line is failing to do so, it suggests the trend lacks volume support and may be weakening.

It is a classic tool that bridges the gap between price action and volume participation. By tracking the flow of money, it provides a deeper layer of confirmation than price analysis alone.