Technical analysis - Technical indicators - Forex Accumulation/Distribution (A/D)
The more expanded the volume of trade is the more noticeable the price changes will be. Forex Accumulation/Distribution Technical Indicator is determined by the changes in price and volume.
Accumulation/Distribution
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The A/D indicator is the accumulation of the distinction between all upward movements (accumulation) in the period, when the price has raised by the closing point and downward movements (distribution) in the period, when the price has gone down by the closing point. The Accumulation/ Distribution indicator helps to determine if the Forex market is controlled by buyers (accumulation) or by sellers (distribution). It was worked out by Larry Williams. This indicator gives seldom signals forming discrepancy with the price at the critical tendencies' breaks.
This indicator is a less commonly used variant of the indicator On Balance Volume. When the Accumulation/Distribution indicator grows, it means accumulation of a currency, as the overwhelming share of the sales volume is related to an upward price movement. When the indicator drops, it means distribution (or selling) of the currency, as most of sales take place during the downward price trend.
Divergences between the A/D indicator and the currency price indicate the upcoming change of prices. As a rule, in this case, the price tendency moves in the direction in which the indicator moves. For instance, if the indicator is growing, and the price of the security is falling, a soon turnaround of price is expected.
This indicator is a less commonly used variant of the indicator On Balance Volume. When the Accumulation/Distribution indicator grows, it means accumulation of a currency, as the overwhelming share of the sales volume is related to an upward price movement. When the indicator drops, it means distribution (or selling) of the currency, as most of sales take place during the downward price trend.
Divergences between the A/D indicator and the currency price indicate the upcoming change of prices. As a rule, in this case, the price tendency moves in the direction in which the indicator moves. For instance, if the indicator is growing, and the price of the security is falling, a soon turnaround of price is expected.
Forex Accumulation / Distribution Calculation
A certain share of the daily volume is added to or subtracted from the current accumulated value of the indicator. The nearer the closing price to the maximum day price is, the greater added share will be. The nearer the closing price to the minimum day price is, the higher the subtracted share will be. If the closing price is precisely in between the maximum and minimum of the day, the indicator value remains unchanged.
A / D(i) =((CLOSE(i) - LOW(i)) - (HIGH(i) - CLOSE(i)) * VOLUME(i) / (HIGH(i) - LOW(i)) + A / D(i-1)
Where:
A / D(i) - value of the Accumulation / Distribution Indicator for the current bar;
CLOSE(i) - closing price of the bar;
LOW(i) - minimum price of the bar;
HIGH(i) - maximum price of the bar;
A / D(i-1) - value of the Accumulation / Distribution Indicator for the previous bar.
A certain share of the daily volume is added to or subtracted from the current accumulated value of the indicator. The nearer the closing price to the maximum day price is, the greater added share will be. The nearer the closing price to the minimum day price is, the higher the subtracted share will be. If the closing price is precisely in between the maximum and minimum of the day, the indicator value remains unchanged.
A / D(i) =((CLOSE(i) - LOW(i)) - (HIGH(i) - CLOSE(i)) * VOLUME(i) / (HIGH(i) - LOW(i)) + A / D(i-1)
Where:
A / D(i) - value of the Accumulation / Distribution Indicator for the current bar;
CLOSE(i) - closing price of the bar;
LOW(i) - minimum price of the bar;
HIGH(i) - maximum price of the bar;
A / D(i-1) - value of the Accumulation / Distribution Indicator for the previous bar.
Another good potential Forex Strategy is the ichimoku chart
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