LinkedInwithBackgroundTechnicalAnalysisGuidetoTechnicalAnalysisTechnicalAnalysisBasicEducationAdvancedTechnicalAnalysisConceptsTechnicalAnalysisTechnicalAnalysisBasicEducationWhatIstheAccumulation/DistributionIndicator(A/D)?Theaccumulation/distributionindicator(A/D)isacumulativeindicatorthatusesvolumeandpricetoassesswhetherastockisbeingaccumulatedordistributed.TheA/Dmeasureseekstoidentifydivergencesbetweenthestockpriceandthevolumeflow.Thisprovidesinsightintohowstrongatrendis.Ifthepriceisrisingbuttheindicatorisfalling,thenitsuggeststhatbuyingoraccumulationvolumemaynotbeenoughtosupportthepriceriseandapricedeclinecouldbeforthcoming.KeyTakewaysTheaccumulation/distribution(A/D)linegaugessupplyanddemandofanassetorsecuritybylookingatwherethepriceclosedwithintheperiod’srangeandthenmultiplyingthatbyvolume.TheA/Dindicatoriscumulative,meaningoneperiod’svalueisaddedorsubtractedfromthelast.Ingeneral,arisingA/Dlinehelpsconfirmarisingpricetrend,whileafallingA/Dlinehelpsconfirmapricedowntrend.TheAccumulation/DistributionIndicator(A/D)FormulaMFM=(Close−Low)−(High−Close)High−Lowwhere:MFM=Money Flow MultiplierClose=Closing priceLow=Low price for the periodHigh=High price for the period\begin{aligned}&\text{MFM}=\frac{(\text{Close}-\text{Low})-(\text{High}-\text{Close})}{\text{High}-\text{Low}}\\&\textbf{where:}\\&\text{MFM}=\text{MoneyFlowMultiplier}\\&\text{Close}=\text{Closingprice}\\&\text{Low}=\text{Lowpricefortheperiod}\\&\text{High}=\text{Highpricefortheperiod}\\\end{aligned}​MFM=High−Low(Close−Low)−(High−Close)​where:MFM=Money Flow MultiplierClose=Closing priceLow=Low price for the periodHigh=High price for the period​Money Flow Volume=MFM×Period Volume\begin{aligned}&\text{MoneyFlowVolume}=\text{MFM}\times\text{PeriodVolume}\\\end{aligned}​Money Flow Volume=MFM×Period Volume​A/D=Previous A/D+CMFVwhere:CMFV=Current period money flow volume\begin{aligned}&\text{A/D}=\text{PreviousA/D}+\text{CMFV}\\&\textbf{where:}\\&\text{CMFV}=\text{Currentperiodmoneyflowvolume}\\\end{aligned}​